Financial crisis

The German finance ministry said the advisers estimated the decline meant a gap of 316 billion euros ($490 billion) in the period up to 2013. A deficit of at least 45 billion euros is expected in 2009.

The advisors offer an independent forecast every half year of how much revenue federal, state and local government can expect. The data is key to finance market expectations of Germany's borrowing activity.

According to the economic prognosis for this year, the government will have to make do with 527 billion euros - that's 45 billion euros or 8.5 percent less since the last assessment was completed in November. Most of the unprecedented fallback is being blamed on the sharp downturn in the Germany economy.

With a general election looming in September, Chancellor Angela Merkel's Christian Democrats have urged the party leader to promise tax cuts. But senior officials within the ruling coalition have advised her to resist, arguing that the dip in revenue and a slate of anti-recession spending is likely to put government budgets under heavy strain.

Finance minister decries tax cuts

In an interview with the Passauer Neue Presse newspaper, Finance Minister Peer Steinbrueck (SPD) criticized talk of tax cuts emanating from the ranks of Merkel's Christian Democrats. "Promises of tax cuts are quite simply an attempt to deceive the electorate," he told the paper.

But the head of the opposition liberal Free Democrats (FDP), Guido Westerwelle, also had harsh words for Steinbrueck in an interview with Hamburg's Abendblatt.

"Finance Minister Steinbrueck has burned up so much money, he's the last person who should be giving us advice," said Westerwelle, who supports tax cuts.