German Government Denies Spending Program Plans | Germany| News and in-depth reporting from Berlin and beyond | DW | 27.07.2008
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German Government Denies Spending Program Plans

Germany is not planning to introduce a multi-billion spending program to help ward off the effects of a slowing economy, Angela Merkels said in an interview published on Sunday.

Port of Hamburg with ships filled with large containers

German economy is slowing down

"Such considerations are not being discussed at this time," Ulrich Wilhelm was quoted saying in Bild am Sonntag on Sunday.

Urlich's comments came one day after Der Spiegel news magazine reported that German Economy Minister Michael Glos wants the German government to spend 10 billion euros ($15.7 billion) on a program which would curb the consequences of economy losing its momentum.

The magazine also reported that Germany's Finance Minister Per Steinbrueck was not in favour of the idea. Chancellor Angela Merkel has been a strong supporter of Steinbrueck's goal to achieve a balanced federal budget by 2011.

Inner-party politics?

Michael Glos

German Economy Minister Michael Glos

Glos is a leader in the Christian Social Union (CSU), the Bavarian sister party to Merkel's Christian Democrats (CDU). The CSU faces a difficult election in Bavaria in September where It could lose its absolute majority.

"If the economy continues to cool down, we're going to have to talk about measures in the autumn on how to reinforce growth," Walther Otrema, state secretary in the Economy Ministry and Glos's deputy, was quoted saying by the news weekly.

The measures would include cutting taxes for private households and reintroducing a commuter tax break, the idea that the CSU has a campaign issue in upcoming parliamentary elections in Bavaria.

Merkel has repeatedly rejected the CSU's proposal to raise commuter tax allowance on the grounds that it is more important to achieve a balanced budget.

A spokesman for the Economy Ministry on Saturday qualified the measures as merely a first draft of a possible program.

Slowing economy

Concerns about the risk of a recession have increased in recent weeks, after the Economy Ministry released provisional and seasonally corrected figures which showed that industrial orders for German companies fell by 0.9 percent in May from the previous month in Europe's biggest economy.

Germany, which is also the world's leading exporter at present, has resisted a slowdown seen in other eurozone countries and the United States but is now headed for a patch of much weaker growth.

German exports fell by a seasonally adjusted 3.2 percent in May, the biggest fall in four years. Economists had expected a mere 0.5 percent drop.

"Yes, we are losing momentum," Rainer Guntermann, senior economist with Dresdner Kleinwort in Frankfurt, told the DPA news agency earlier this month.

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