Merkel defends euro policies in parliamentary budget debate

Nov 23, 2011, 12:56 GMT

Berlin - Chancellor Angela Merkel on Wednesday defended her euro bailout policies in a wide-ranging budget speech to Germany's parliament, but was criticized by the opposition over her plans for a modest income tax cut.

Merkel also touched on world negotiations about global warming, saying it was 'particularly difficult and disappointing' that no world treaty had been negotiated to reduce carbon dioxide emissions.

The 2012 budget proposal would provide for the federal government to spend 306.2 billion euros (410 billion dollars).

The eurozone's biggest member has borne the main burden of bailing out weaker governments which have run up huge deficits. Merkel is opposed to further increases in federal spending to help them.

She said imposing stricter discipline by changing the eurozone treaties was the best way to regain the confidence of creditors.

Merkel criticized the European Commission for outlining new proposals for eurobonds, which she opposes. She said she found it 'it extremely worrying and inappropriate that the European Commission is steering the focus to such eurobonds today.'

Opposition parties seized on a planned rise in net federal borrowing next year, to 26.1 billion euros.

The government argues this rise only reflects an expected slowdown in economic growth in 2012, after gushing tax revenues this year.

Sigmar Gabriel, leader of the opposition Social Democrats, attacked government plans to trim income taxes in 2013 and 2014, saying this would 'fritter away' money, yet put only 4 euros per month in the pocket of the average earner.

'We ought to save up today, so that we have jobs in this country tomorrow,' he said, noting fears that a recession is on the way.

The chancellor voiced scepticism that a summit on global warming to start November 28 in Durban, South Africa would achieve any progress towards the agreed aim of reducing emissions sufficiently to avoid an average 2 degrees of warming by the year 2050.

German diplomacy on climate change is overseen by a unit in Merkel's office.

The Kyoto Protocols committing several major nations to emissions cuts are about to expire without any treaty to replace them.

'The big emitters of the future, China, India, Brazil and so on, are not willing at the moment to accept binding international treaties to reduce ... their carbon dioxide emissions,' she said.

'Europe will follow a very clear course. Our reduction targets are firm. We won't change them.

But she noted European efforts to control emissions will come to naught if the continent's proportion of overall emissions is shrinking in comparison to other regions.

'Then it's already clear today that the objective of a 2-degree reduction cannot be achieved,' she said.