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Updated: June 12, 2010 19:25 IST

Thousands demonstrate in Germany against Merkel budget cuts

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German Chancellor Angela Merkel. File photo: AP.
German Chancellor Angela Merkel. File photo: AP.

Opponents of Germany’s austerity programme took to the streets on Saturday in two cities, as Chancellor Angela Merkel argued that spending cuts were vital.

In the southern car—making city of Stuttgart, demonstrators held up placards demanding a raise in the upper bracket of income tax instead of welfare reductions. The march was organized by trade unions under the motto “This Is Not Social Justice.” A similar rally was scheduled during the afternoon in the capital Berlin.

In an interview to appear on Sunday in the newspaper Bild am Sonntag, Ms. Merkel rejected charges that the poor were being unfairly burdened.

“Many people do realize that we have to save money and reduce debt,” she said. “The measures in the job sector aim to bring significantly more long—term unemployed back to work than in the past.” Ms. Merkel said that other sectors were sharing the burden.

“Alongside the necessary cuts in the social—welfare budget, business is also making a contribution along with the civil service and administrative departments,” she said.

Wolfgang Schaeuble's suggestion

However the finance minister, Wolfgang Schaeuble, suggested that the austerity package might be amended by parliament to include heavier taxes on upper income—earners.

Mr. Schaeuble has appeared in the past to favour tax hikes, but was blocked last week by the smaller coalition party, the Free Democrats.

“Parliamentarians are perfectly entitled to replace government measures with others of their own,” Mr. Schaeuble said in an interview with the news magazine Der Spiegel. Asked if this included income—tax cuts, he responded, “Why shouldn’t it?” In her weekly video message, Ms. Merkel rejected the French position that government spending cuts are a threat to economic recovery.

She said she would explain the “ambitious savings programme” to European Union leaders at their summit this Thursday in Brussels.

“I will also be reporting that we have cut and saved in such a way that incentives are still there for growth,” she said, adding that she wanted to see EU—wide regulation of financial markets introduced.

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