BERLIN, June 26 (Xinhua) -- The German cabinet approved the draft federal budget for 2020 on Wednesday.
German Minister of Finance Olaf Scholz is planning to increase government spending by 359.9 billion euros (408.9 billion U.S. dollars) in 2020, despite weaker tax revenue growth.
Nonetheless, due to the gloomy economy and weaker tax revenues, the German government reduced its planned spending in the 2020 budget by 2.7 billion euros.
According to recent tax estimates by the German Ministry of Finance, German federal, state and local governments would have 124.3 billion euros less to spend by 2023 than previously predicted.
German Finance Minister Scholz is also pursuing a "black zero" policy, introduced by the former finance minister Wolfgang Schaeuble, in which no new debt is added and overall debt is paid down.
The draft budget will foresee billions of euros of investment in transport in Germany, especially rail transport, and relief for families on low and medium incomes.
The largest individual budget will be that of German Labor Minister Hubertus Heil, who will be allowed to spend more than 148 billion euros.
Germany's defense budget, which is to increase by 1.7 billion to 44.9 billion euros, would be the second largest budget.
Meanwhile, Germany industry accused the German government of setting the wrong priorities in its financial planning.
"So far the money has been spent too one-sidedly. The coalition is too concerned with redistribution and too little with securing the future," said Joachim Lang, director general at the German Federation of Industries (BDI).
In view of falling growth forecasts and declining incoming orders, the German government "must give top priority to boosting investment and innovation," added Lang.
In contrast, Germany's largest social association, the VdK, called for a stronger focus on social measures in the draft budget.
"The cabinet must not forget the fight against social inequality. It must be clear that there must be no savings in important social policy measures," stressed Verena Bentele, president of the VdK.
Germany needed to introduce a basic pension because it would "protect people from poverty in old age and recognize people's life achievements," according to Bentele.
The German Bundesbank recently announced that it is expecting German gross domestic product (GDP) to grow at 1.2 percent in 2020, while the German government is expecting GDP growth of 1.5 percent.
