German budget cuts last Merkel to assert authority

German Chancellor Angela Merkel agreed on Monday with his cabinet a package of budget cuts and will outline his policy agenda until 2014, a series of steps he hopes will help push the euro as its own authority.

The ministers resumed talks on Monday after work Sunday night. Merkel is expected to announce the result of the proposed 2011 budget and financial planning for the next four years in the early afternoon on Monday.

Some experts say the plan cuts of up to 10,000 million euros annually (11 940 million), along with some limited tax increases will be the largest German austerity plan since the Second World War.

Merkel wants to give an example of fiscal adjustment to try to regain investor confidence in the euro, damaged by high deficits in Greece and other euro zone states. However, you must deal with a delicate balance to ensure that the cuts will not cloud the fragile recovery of the first euro zone economy.

The German public deficit would likely exceed 5 percent of gross domestic product (GDP) this year. Despite being significantly below the levels of other euro area countries still exceeds the limit set by the European Union's 3 percent.

Moreover, Merkel's political authority is also at stake.

Affected by a decline in the popularity of his conservative party and accused of weak leadership in the crisis in the eurozone, needs to regain the political initiative and present a package that voters support sustainable.

"The cabinet meeting will be an important direction for Germany in the coming years, which will be decisive," Merkel told reporters Sunday before starting the talks.

Merkel has promised to protect education and pensions, but has pointed to social security spending as an area of possible cuts.

It also seems likely to make targeted reductions to unemployment as well as maternity aid for the unemployed, measures which could save around 400 million euros.

In addition, 10,000 jobs will be cut in public, according to German media. The defense budget would be reduced by about 600 million euros in 2011 and savings would reach 1,100 million euros in 2012.

It is also likely to create a tax on the use of nuclear fuel for those companies that benefit from the planned extension of the life of some nuclear plants. According to the German media, the measure could raise around EUR 2,300 million a year.

Once the Cabinet had agreed the draft budget for 2011, Merkel is to gain the approval of the upper and lower houses of Germany, which is not as easy as his coalition lost its majority in the Senate last week .