No more spending excuses for Merkel as investment bottlenecks ease

BERLIN, Aug 18 (Reuters): German Chancellor Angela Merkel has fended off growing calls for more fiscal stimulus by citing the slow outflow of existing federal funds - but data suggests the money is indeed being used up as local authority bottlenecks gradually clear.

With Europe's largest economy on the brink of recession and borrowing costs at record lows, Merkel has faced pressure at home and from abroad to ditch her pledge to target balanced budgets and instead boost public investment by taking on new debt.

Merkel and her conservatives say Berlin has already earmarked billions of euros in investment for schools, nurseries and hospitals but that local authorities have spent only a fraction of this windfall.

But this excuse seems no longer valid: Figures from the finance ministry show that towns and municipalities are now tapping the federal government's funds more actively, suggesting that planning and labor bottlenecks are easing.

Of 3.5 billion euros ($3.9 billion) earmarked in a municipal infrastructure fund for investment in schools, nurseries and hospitals (KInvFG I), local authorities have applied for nearly 3.4 billion euros, the data showed - roughly 96 per cent of the overall amount on offer.