BRUSSELS - GERMANY'S new tax cut plan, announced at the weekend after similar moves in Italy and Sweden, is in line with a trend in Europe: most nations prefer to overlook deficits and focus on relaunching economies.

German Chancellor Angela Merkel and her new liberal allies are looking at 24 billion euros' (S$50.2 billion) worth of tax cuts to ease the burden on households and companies in their legislative programme for the next four years of government.

The news is only likely to add to growing alarm at the European Commission and the European Central Bank that in times of hardship EU nations are increasingly reluctant to reign in strongly rising budget deficits.

'We will have to accept another exceptionally high debt,' Wolfgang Schaeuble, the German interior minister set to take over at the finance ministry of Europe's biggest economy, said after the tax cuts were announced on Saturday.

Italy is another nation that has bet on containing taxes to bolster economic activity, in the wake of the worst economic crisis the European continent has known since World War II.

On Thursday, five months ahead of regional elections, Prime Minister Silvio Berlusconi said his cabinet was looking at a reduction or perhaps even the elimination of business taxes, in response to demands from employers. -- AFP