Public spending in Germany, as a percentage of total econ-omic output, has fallen sharply in the past three years and is fast approaching British levels, according to a finance ministry study.

The report, obtained by the Financial Times, shows state expenditures reached 45.6 per cent of gross domestic product last year, compared with 44.1 per cent in the UK, which is generally thought of as a low-tax, low-spending economy.