Merkel holds Germany cabinet meeting on budget

image captionChancellor Merkel says Germany cannot live beyond its means

German Chancellor Angela Merkel is holding a special, two-day cabinet meeting to come up with a savings plan for the country's budget.

Berlin wants to rein in its deficit to meet European Union rules, as a sovereign-debt crisis has hit markets and the euro in the past few months.

Germany faces a deficit of more than 86bn euros ($103bn; £83bn) this year and has to cut 10bn a year until 2016.

Measures being considered include road tolls, tax rises and welfare cuts.


Additional health-care payments and reduced public service worker numbers have also been mooted as potential savings possibilities.

German media reports have also said there may be cuts to reduce military spending, shrinking the army and scrapping conscription.

Chancellor Merkel has insisted Germany cannot live beyond its means, saying "we can only spend what we take in".

And Finance Minister Wolfgang Schaeuble has said the measures may be "stricter than necessary" to allow greater room for economic manoeuvre later.

But some experts worry Germany may cut back too deeply when much of Europe is looking to the country to lead the way out of financial crisis.

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