October 7, 2016 / 11:42 AM / a year ago

Germany's Gabriel urges more investment, warns against tax cuts

BERLIN, Oct 7 (Reuters) - German Economy Minister Sigmar Gabriel made the case on Friday for more public investments in schools, roads and digital infrastructure, warning Chancellor Angela Merkel’s conservatives against promising tax cuts ahead of next year’s election.

“The level of investment is always a yardstick for how firmly a country believes in its future and how it is willing to tackle this,” Gabriel said in a news conference, presenting the government’s updated growth forecast.

“It’s clear that we need significantly more investment in education and schools,” said Gabriel, head of Germany’s Social Democrats, junior coalition partner in Merkel’s government.

He warned against promising voters “gigantic tax cuts” and increased welfare handouts because Germany’s currently solid public finances were mainly due to the low interest rates.

“Interest rates can rise again. The positive interest rate effect (for the German budget) currently is 20 billion euros per year,” he added. (Reporting by Michael Nienaber, Editing by Andrea Shalal)

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