German Chancellor proposes sharp budget cuts

German Chancellor proposes sharp budget cutsAccording to the official reports, German Chancellor Angela Merkel on Monday revealed plans to trim government spending in an effort to save almost $100 billion by 2014.

Deutsche Welle has reported that the plan calls for phasing in the cuts with a savings of $12.4 billion next year.

Exceeding expectations, the proposed cuts call for spending reductions of $20.3 billion in 2012, $30.6 billion in 2013 and $38.6 billion in 2014.

The cuts do not change pension rates in Germany or alter plans to reform healthcare, Merkel has said.

As part of the austerity package, German Minister of Defense Karl Theodor zu Guttenberg was asked to trim the size of the military from 250,000 personnel to 210,000.

"I can say that the last few hours have seen a historic show of strength on the part of our government, Merkel said in revealing the plan at a news conference in Berlin.

She further said, "Germany has never agreed to an austerity package to this extent, but these cuts have to be made in order for the country to establish a stable economic future."

The cuts put "unilateral pressure on the poor," said Union leader Frank Bsirske.

According to General Secretary of the Social Democrats Andrea Nahles, the cuts would create a "social imbalance," cutting deepest into services required by the neediest members of society.
(With Inputs from Agencies)