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Existing stimulus may not suffice, says German Chancellor

Existing stimulus may not suffice, says German Chancellor
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First Published: Tue, Dec 16 2008. 06 11 PM IST
Updated: Tue, Dec 16 2008. 06 11 PM IST
Mannheim, Germany: Germany knows its existing economic stimulus plan may be insufficient but will not take any further steps until US President-elect Barack Obama takes office, Chancellor Angela Merkel said on Tuesday.
A package of measures the German government says is worth about €31 billion (Rs2.03 trillion) is already due to come into effect in January, but Merkel has faced pressure from European Union peers such as France to do more.
“We know that alone might not suffice,” Merkel said of the first package in a speech in Mannheim in western Germany.
“If it’s enough to launch a big (economic) programme in America when the new president takes office, it will also be right to put together a second programme in Germany at a similar time,” she added.
Obama’s inauguration is due on 20 January.
Economy minister Michael Glos said on Monday the government still has scope to increase its economic stimulus package.
Glos, a member of the Christian Social Union (CSU), sister party to Merkel’s Christian Democrats (CDU), has repeatedly argued in favour of cutting taxes to bolster Germany’s response.
Merkel has so far said she believes there will be scope for tax cuts only after a federal election in September.
Highlighting the bleak outlook the economy is facing, the BdB commercial banks’ association said earlier on Tuesday that Germany will suffer its deepest recession since World War II next year.
The BdB forecast Europe’s largest economy would contract by “at least one percent” in 2009. It had previously forecast the German economy would stagnate next year.
A contraction in gross domestic product of 1% would be the worst showing since the war. Reuters
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First Published: Tue, Dec 16 2008. 06 11 PM IST