Don't burden Germany with costs, warn Merkel's Bavarian allies

Germany should not be burdened with the extra costs arising from Britain leaving the European Union, Bavarian Finance Minister Markus Soeder was quoted as saying on Thursday.

Soeder, whose Christian Social Union (CSU) governs the southern state of Bavaria and is allied with Chancellor Angela Merkel, told Die Welt newspaper that the EU should compensate for the missing British payments into its budget by cutting costs instead.

"People are saying we could face about a billion (euros) in additional contributions. We Germans need to make sure that after a Brexit the British contributions up to now are not simply transferred on to Germany and the rest of the net contributor countries," Soeder said.

Italian calls for EU deficit and banking aid rules to be adjusted to take account of its fiscal and financial troubles following the Brexit rules should be rebuffed, he added.

Stricter budget rules for the European Union countries and a downsized European Commission were part of a post Brexit reform plan for the bloc drafted by aides for German Finance Minister Wolfgang Schaeuble, according to the Handelsblatt daily.

Britain's decision to leave the EU is likely to reduce German exports and reduce growth by as much as half a percentage point next year, the economic institute DIW has estimated.

As a result, the International Monetary Fund is likely to lower its growth forecast for the German economy in the coming weeks, a senior IMF official said on Wednesday.