Speaking at a press conference following a meeting with Hungarian Prime Minister Viktor Oban, German Chancellor Angela Merkel has stated that tax cuts could help stabilise domestic demand and the European economy.

In May, Germany's upper house of parliament had rejected tax cuts because they were considered to be irresponsible at a time of budget consolidation.

When asked about granting Greece a time extension, Merkel answered that her opinion will be based on the 'Troika' - the European Central Bank (ECB), European Commission and International Monetary Fund (IMF) - report.

Next up for Merkel, she will meet with European Commission president Jose Manuel Barroso in Berlin.

German growth estimates are cut as well

German leading economic research institutes have cut in half their joint economic growth forecast for Germany. Europe's largest economy is expected to only grow by 1% in 2013 as opposed to a prior forecast of 2% because of the Eurozone crisis and global economic weakness. The jobs market is expected to become stangant with the unemployment rate remaining at an average of 6.8%. The economists also lowered their growth forecast for 2012 from 0.9% to 0.8%.



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