Germany to post public sector surplus this year

BERLIN (Reuters) - Germany will post a budget surplus in 2018 of about 1 percent of output, the economy ministry said in a report seen by Reuters on Tuesday, signalling that the next government will have wiggle room to trim taxes and increase spending.

The report, which will be officially presented on Wednesday, also said that Germany's debt burden will probably fall to below 60 percent of gross domestic product (GDP) - in line with European Union rules.

It also said that Germany's fiscal policies must be geared to a normalisation of interest rates in the euro zone.

The public sector, which includes the federal government, regional states, municipalities and social funds, posted a record budget surplus of 38.4 billion euros (£33.8 billion) in 2017.

(Reporting by Gernot Heller; Writing by Joseph Nasr; Editing by Madeline Chambers)