UPDATE 1-Germany to cut deficit faster than previously planned

* Projections see deficit meeting EU deficit limit in 2012

* Economic pick-up aids deficit reduction

* Germany pushing other euro zone states to rein in deficits

(Adds detail, background)

By Paul Carrel

BERLIN, July 15 (BestGrowthStock) – Germany expects to cut its
budget deficit to meet the European Union’s limit of 3 percent
of gross domestic product in 2012, a year earlier than
previously planned, Finance Ministry figures showed on Thursday.

The ministry released the new deficit projections after a
raft of recent economic data pointed to a strong economic
pick-up in the second quarter of this year.

Germany has urged euro zone countries to rein in their
deficits to secure the stability of the European single
currency, resisting pressure from U.S. policymakers and others
to leave fiscal support in place. [ID:nLDE66D0F9]

The European Central Bank has also called for budget
consolidation, saying it would help secure the recovery.

Chancellor Angela Merkel’s government had previously said it
aimed to bring Germany’s deficit below the EU cap in 2013. Last
year the deficit crept above 3 percent as Europe’s biggest
economy suffered a record contraction.

The ministry said in a statement it now projected the
deficit to decline from 4.5 percent of gross domestic product
(GDP) this year to 4 percent in 2011, before narrowing further
to the EU limit of 3 percent in 2012.

Hopes for a more rapid improvement in Germany’s public
finances have been spurred by the economic pick-up.

Having previously forecast the economy would grow by 1.4
percent in 2010, senior figures in the government have said a
figure of close to 2 percent may be possible. A number of
private sector economists are even more optimistic.

Official data earlier this month showed German trade surged
in May while industrial output jumped more than expected,
fuelling hopes the economy may have posted its strongest growth
in over two years in the second quarter.

The ministry figures showed it expected federal government
net new borrowing would not, however, decline below the 2009
level until 2013.
(Edting by Susan Fenton)

UPDATE 1-Germany to cut deficit faster than previously planned