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Business

Business Briefs

The chancellor and his finance minister say they will borrow to finance a tax cut designed to stimulate the economy; tourism company Thomas Cook announces more job cuts; more Germans bank online; and more.

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Eichel (left) and Schröder want to encourage consumer spending

Government will borrow to finance tax cut

Chancellor Gerhard Schröder and his finance minister, Hans Eichel, told reporters Wednesday that the government will borrow in order to finance earlier-than-planned tax cuts designed to stimulate the economy. Schröder's social democrat-green coalition government created waves last week when it announced the bringing forward to 2004 a planned 10 percent income tax cut and tax breaks for small and medium-sized business. Critics said the loss of tax revenues in 2004 would create a budget gap of at least €7 billion and further burden the already slumping German economy. But Schröder and Eichel said encouraging consumer spending was more important to them right now than future budget holes. To make up for the gap, the government will borrow between €4 and €5 billion, privatize and cut subsidies for farmers and builders. Opposition politicians immediately responded to Eichel and Schröder's announcement Wednesday afternoon by saying they hoped for more subsidy cuts and less borrowing. The coalition government will introduce its finance plans to parliament on Aug. 13. Political observers are certain that the plans will not pass in their present form.

Thomas Cook slumping, announces job cuts

Battered by the slumping tourism industry, German tourism giant Thomas Cook announced Wednesday it was stepping up its savings course with job cuts. After posting their first-ever losses and announcing that bookings were down earlier in the year, Thomas Cook said it would cut one in every five jobs in Germany. Around 1,200 jobs will be slashed in the next three years, the company said. A spokesman said the figure was assuming "the worst-case scenario" and might not be reached. But the announcement was the latest in a series of blows the industry has dealt the company. At the beginning of 2003, Thomas Cook posted a €119.5 million ($133.99 million) loss for the 2001-2002 fiscal year. As part of a savings course, the company cut 500 jobs.

Hypovereinsbank sells daughter bank

Hypovereinsbank, Germany's second largest bank, completed the sale of its daughter bank to Frankfurt-based DZ Bank, HVB announced on Wednesday. The Munich bank sold Norisbank to DZ for 447 million euros, earning a capital gain of €250 million for itself. HVB said the sale is a move forward towards its goal to drive its Tier 1 capital ratio from 5.7 percent to 7 percent by the end of the year. DZ is expected to benefit from Norisbank's consumer finance products know-how. The DZ will overtake Norisbank at the end of September.

More Germans banking online


More Germans are heading online for their banking needs according to new figures from the German Association of Banks. There were 30 million bank accounts managed in 2002, indicating that an increasing number of Germans are preferring the tap of keys and click of the mouse to standing in lines at local branches. The figure is a 50 percent increase over amounts in 2001 and keeps to a growing trend that first began in 1998.

Compiled by DW with information from wire services.

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