Wolfgang Schaeuble.jpg
German Finance Minister Wolfgang Schaeuble
Photograph: EPA/LAURENT GILLIERON

German Finance Minister Wolfgang Schaeuble on Wednesday warned European nations against launching a race to cut taxes after Britain set out plans to slash corporate tax rates following last month's Brexit vote.

"We do not have any intention in Europe of starting a race to the bottom," said Schaeuble. "This makes no sense."

Schaeuble was speaking at a press conference after announcing that Berlin was sticking to its balanced budget plans over the next four years, despite the uncertainty unleashed by Britain's vote to exit the EU and the costs of accommodating large numbers of refugees.

The British Chancellor of the Exchequer George Osborne announced plans earlier this month to cut the nation's corporate tax to less than 15 per cent as part of an effort to ease investors' concerns about last month's British vote to exit the European Union.

German Chancellor Angela Merkel's cabinet agreed on Wednesday to Schaeuble's draft budget plans for next year and for the years up to 2020.

The budget includes spending 77.5 billion euros (86.4 billion dollars) over the next four years on providing for refugees who have entered the country and dealing with the causes of European migration.

About 1 million refugees, many fleeing war in the Middle East and Africa, arrived in Germany last year.

Berlin also plans to cut its public debt to less than 60 per cent of gross domestic product by 2020, bringing it into line with the debt target for euro member states for the first time since 2002.

Schaeuble expects government spending to total 328.7 billion euros next year before rising to 349.3 billion euros in 2020.

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