Posted by WARREN MOSLER on February 20th, 2009
This kind of fiscal drag is highly counterproductive.
by Rainer Buergin
Feb 20 (Bloomberg) — German tax revenue rose 3.4 percent in January to 39.1 billion euros ($49.6 billion), led by flows to Finance Minister Peer Steinbrueck’s federal coffers, the Finance Ministry said in its monthly report.
Intake at federal level increased 8.5 percent to 15.9 billion euros while the country’s 16 states reaped 18.5 billion euros, 2.1 percent more than a year earlier, the report showed. Germany’s budget plans call for a tax revenue increase of 2.1 percent for the year as a whole, compared with 2008.
“The cooling world economy has by now fully impacted on Germany’s domestic economy,” the ministry said. “The worsening of the situation and the outlook for the manufacturing industry” suggest that “the recession will continue.”
Forward-looking economic indicators suggest the German economy will shrink in the first quarter after contracting 2.1 percent in the final three months of last year, a drop that was bigger than expected, the ministry said.