The deficit ceiling in Germany's federal budget for 2011 "obviously contradicts" the intentions of the country's so-called debt brake even as the shortfall shrinks, the Bundesbank said.
Chancellor Angela Merkel's government should "correct" a deficit cap in the budget that was €12bn too high because it was based on outdated projections, the Bundesbank said in its monthly report. Germany's overall shortfall will approach 2pc this year, less than the government expects.
"If this elevated sum were to be kept and hence additional leeway for borrowing created," the government's budget planning would be "in obvious contradiction to the clearly documented regulation intention of the debt brake," the Bundesbank said.
Germany's economic recovery is helping its federal and regional governments service ballooning debt. Federal and state tax revenue grew a combined 5.5pc last month compared with a year earlier.
Opinion, Page 29