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BUDGET

Germany to take on €70 billion more in new debt than expected in 2021

Germany plans to take on €166 billion in new debt next year, according to a draft bill seen by AFP, as measures to curb the second wave of the pandemic eat into government coffers.

Germany to take on €70 billion more in new debt than expected in 2021
Finance Minister Olaf Scholz speaking on Sunday in Berlin. Photo: DPA

Borrowing in Europe's largest economy in 2021 will rise by €69.9 billion more than previously announced, further shattering Germany's constitutionally enshrined debt brake rule, the draft legislation said.

In September, Finance Minister Olaf Scholz said that Germany would take on new debt of €96.2 billion next year.

READ ALSO: 'Doing nothing would be more expensive': Germany to take on new debt again in 2021

But an “extension of corona support”, including through prolonging a short-time working scheme to mid-2021, will boost spending, the report said.

A final decision will be taken by the budget committee in a meeting on Thursday, before being voted on by the German parliament.

Additional costs may need to be added if the country's current curbs shuttering leisure venues and sports facilities as well as limiting restaurants to takeaways are extended past November.

Other industries including in retail and manufacturing have been allowed to stay open.

The government promised an additional €10 billion in support of sectors specifically hit by the November measures, which Chancellor Angela Merkel dubbed “lockdown light”.

The chancellor is expected to take stock of the measures and discuss extensions or further curbs at a meeting with regional leaders of Germany's 16 states on Wednesday.

“What will be discussed on Wednesday must be taken into account afterwards,” a finance ministry spokesperson said.

The impact of the pandemic has forced Merkel's government to temporarily abandon its years-long dogma of a running a balanced budget.

Berlin is expected to borrow €218 billion in 2020, after the government pledged more than a trillion euros to shield German workers and companies from the virus fallout.

Estimates for 2020 tax revenues were ticked up earlier this month to around €278 billion — €3.4 billion more than predicted, but still more than €50 billion below 2019.

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ECONOMY

Sweden boosts spending on civil defence in spring budget

Sweden is to channel a further 800 million kronor to local government and other organisations to bolster Sweden's civil defence capabilities, the country's finance minister has announced.

Sweden boosts spending on civil defence in spring budget

The new funding, which will go to municipalities, regional government, and other organisations, was announced of part of the country’s spring budget, announced on Tuesday. 

“This will strengthen our ability to resist in both war and peace,” Sweden’s finance minister, Mikael Damberg, said in a press conference. “If the worst happens, it’s important that there is physical protection for the population.” 

The government is channelling 91m kronor towards renovating Sweden’s 65,000 bomb shelters, and will also fund the repair the country’s network of emergency sirens, known as Hesa Fredrik, or Hoarse Fredrik, many of which are currently out of order. 

A bomb shelter in Stockholm. Sweden’s government is spending 800m kronor in its spring budget to boost civil defence. Photo: Anders Wiklund/ TT

Sweden’s Social Democrats are currently ruling on the alternative budget put together by the right-wing opposition, making this spring budget, which makes changes to the autumn budget, unusually important. 

The budget includes extra spending of some 31.4 billion kronor (€299m), with 500m kronor going to extra spending on healthcare,  and 10.3 billion kronor going towards supporting Ukrainian refugees, of which nine billion will come from the aid budget. 

The spring budget also includes the so called “pension guarantee bonus”, or garantitillägg, which will see four billion kronor (€390m) going to those with the lowest pensions. 

The bonus, which was the price the Left Party demanded for letting Magdalena Andersson take her place as prime minister, risks being voted down by the right-wing parties in the parliament. 

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