The German parliament today approved the government's fiscal 2010 budget, which relies on unprecedented levels of new debt in order to counter the economic crisis, according to dpa. New loans worth 80.2 billion euros (109 billion dollars) are to account for a quarter of this year's 320-billion-euro budget. Much of this is to cover a drop in social security contributions at the same time as welfare spending has risen, both of which are a direct consequence of higher unemployment. The parliament tweaked the budget proposed by Finance Minister Wolfgang Schaeuble, slightly cutting expenditure and reducing new loans from the 85.8 billion euros approved by the cabinet earlier this year. Chancellor Angela Merkel defended her economic management, stressing that the new levels of debt were necessary after the economy had contracted by 5 per cent in 2009. "None of us have any experience with such a dramatic economic meltdown," Merkel told parliament earlier in the week. Merkel's centre-right government coalition of her Christian Democrats and the pro-business Free Democratic Party (FDP) came to power last year on election pledges to boost the economy. Schaeuble warned that tough savings lay ahead, since Germany is bound by legislation severely limiting the amount of debt the state is allowed to accrue after 2011. The minister described the "exceptionally difficult, challenging task," of sustaining a productive, competitive economy whilst also winding down state loans from the year 2011. Earlier in the week, Merkel told parliament that Germany was faced with a "herculean task," in this regard. The government's economic stimulus package and a bank rescue fund, introduced by the previous government to offset the financial and economic crisis, could cause federal debts to rise as high as 100 billion euros. The parliamentary majority of CDU and FDP carried the budget through parliament, while opposition parties accused the government of using misleading budget calculations ahead of May's state elections in North Rhine-Westphalia, Germany's most populous state. The European Commission has also criticized Germany's high levels of borrowing. Brussels fears the debt of Europe's largest economy could rise from its current 76 per cent of gross domestic product (GDP), to 82 per cent by 2013. The European Union limit is 60 per cent of GDP.
