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Merkel to work on second German bailout

Latest update : 2008-12-14

Chancellor Angela Merkel is holding a mini-summit with experts and ministers on Sunday to prepare a new economic plan to tackle Germany's share of the financial crisis, after the first failed to take effect.

AFP - Germany is preparing a second economic rescue plan after the first failed to have the impact expected, a report said ahead of a Sunday meeting of experts and ministers called by Chancellor Angela Merkel.

The 30-billion-euro (40-billion-dollar) plan would be made public in January after US President-elect Barack Obama took office, said the the weekly Wirtschaftswoche quoting government sources.

"The value of the second plan would have to be "at least 30 billion euros," similar to the first package which was worth 32 billion euros over two years and which has just been adopted by the German parliament, a source said in the report due to appear tomorrow.

Peter Struck, head of the parliamentary group of the Social Democrats, junior partners in Germany’s ruling "grand coalition," however, told the Sunday newspaper Tagesspiegel that a decision on a new plan would be taken "at the earliest at the end of February."

Merkel told another Sunday newspaper, Bild am Sonntag, that Sunday's mini-summit would pave the way for a "concerted approach" to tackling the economic crisis.

"We want to study the possibilities for reacting quickly to a worsening of the crisis," she said.

Discussions in the coming weeks would include "great concentration on a concerted approach," to coming through the crisis, she said.

"It's about reaching a common evaluation of the perspectives for 2009 with social, business and banking partners," she added.

Merkel told the newspaper that she was confident that Germany was a "strong country" and would weather the storm.

"I am entirely convinced that we, the Germans, are going to overcome this challenge," she said.

Nobel Economics Prize laureate Paul Krugman meanwhile accused Merkel in an interview to appear on Monday of being unaware of the seriousness of the economic crisis.

Krugman told the weekly Der Spiegel that Merkel and her finance minister Peer Steinbrueck still viewed the world as it was one or two years ago, when inflation and deficits were the main economic threats.

Merkel on Thursday backed a 200-billion-euro economic stimulus target for the European Union, which would ramp up public investment across Europe and allow for some taxes to be eased.

Date created : 2008-12-14