German Chancellor Angela Merkel's cabinet has settled on a spending plan for the federal government's budget in 2014.

Finance Minister Wolfgang Schäuble hailed the plan as a growth friendly deficit reduction while critics feel it does not go far enough, The Wall Street Journal reported.

Under the plan federal borrowing in 2014 will be €6.4bn. Federal spending will be reduced by €5.1bn from 2013 to 2014, while government income from taxes and other sources will increase €5.6bn.

Germany would have come close to a balanced budget in 2014 if it had not contributed €4.3bn to help bail out other European countries during the economic crisis.

Europe's biggest lender will now achieve a balanced budget - requiring no new debt - in 2015, the finance ministry said.

Some economists argued that Germany should do more to balance its budget quickly.

"Of course, you can argue that the budget could have been more ambitious," said Carsten Brzeski, a senior economist at ING. "It's a middle road," he added, with the German government "benefiting from some tail wind from earlier reforms, and some tail wind from the stronger economy."

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