Don't miss

Replay


LATEST SHOWS

EYE ON AFRICA

Egypt, Morocco lose first World cup matches conceding last minute goals

Read more

MEDIAWATCH

Macron likes his china fancy

Read more

THE WORLD THIS WEEK

World Cup: And in the end, Putin wins?; Trump hits back at critics; Migrant crisis divides EU governments

Read more

FRANCE IN FOCUS

The Jewish community's place in French society

Read more

#TECH 24

Football and tech: The data game is on!

Read more

ENCORE!

John Cameron Mitchell on his new film 'How to Talk to Girls at Parties'

Read more

DOWN TO EARTH

Iran's water crisis

Read more

FOCUS

Residents of southern Lebanon live in fear of another war

Read more

#THE 51%

Turning pain into hope: Rwanda's children of rape

Read more

Germany adopts second stimulus package

Video by Philip CROWTHER

Latest update : 2009-01-13

The two parties making up Germany's grand coalition hammered out a new economic stimulus package, the first having been judged insufficient. The two-year €50bn package includes infrastructure investments and a raft of tax cuts.

AFP - Germany's governing coalition hammered out on Monday the country's biggest economic stimulus package in its postwar history, aimed at heading off a painful recession in the world's number one exporter.
   
The package, worth 50 billion euros (67 billion dollars) over two years, is a second, more powerful shot in the arm for Europe's biggest economy after Chancellor Angela Merkel's first effort last year proved too small.
   
Finalised in late-night talks in Berlin between Merkel's CDU conservatives and the centre-left SPD, it includes 17-18 billion euros in infrastructure investments and tax cuts for firms and individuals.
   
Other elements include a one-off extra child benefit payment, and sweeteners to persuade reluctant consumers to buy new, environmentally friendly cars to boost Germany's struggling auto sector.
   
It also includes cuts in health insurance contributions in order to put more cash in shoppers' pockets, and simpler rules on creating temporary jobs, the heads of the main parties' parliamentary groups said after the meeting.
   
"All in all this is a package that will help us to get through this economic crisis and keep jobs," Volker Kauder, head of the CDU in parliament, told reporters late Monday.
   
But economists worry the package will not bear significant fruit as the main source of Germany's strength in recent years -- its export sector -- is now its Achilles' Heel, with the global downturn hitting foreign demand for its goods.
   
Data in recent months have made it clear that Europe's biggest economy is going south, with industrial orders and output falling off a cliff and unemployment on the rise in December for the first time in 33 months.
   
Unemployment now stands at three million, and economists predict that one in ten of the workforce will be out of a job by the time the country decides in elections in September if it wants four more years with Merkel at the helm.
   
The government fears that the economy could contract by three percent this year, making 2009 the worst year since the modern federal republic rose out of the ruins of World War II in 1949.
   
Andreas Rees, Germany expert at Italian bank Unicredit, said before Monday's announcement -- the main outline was already known -- that Merkel's efforts come too late to stop the German economy shrinking in the first half of 2009.
   
The impact of the package will be felt only in 2010, Rees said, as the global economy begins to pick up.
   
The task of agreeing a second stimulus package was made all the more difficult by the fact that the SPD and the CDU are currently jockeying for position ahead of September's vote.
   
Both parties want to win enough votes to be able to form a government with a different party, and as a result they were keen for the package to bear their own signature.
   
The cabinet is due to decide on the stimulus package over the coming week before the lower and upper houses of parliament vote in late January or early February.
   

Date created : 2009-01-13

COMMENT(S)