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Germany

Germany Passes Stimulus Plan Despite Wary Public

Germany's lower house of parliament, the Bundestag, has approved a 50-billion-euro ($64 billion) stimulus package aimed at lifting the country out of its worst postwar recession.

small growing plant

Will the expanded package lead to growth?

Chancellor Angela Merkel's right-left coalition cobbled together the package last month after an initial 31-billion-euro rescue plan approved last year was attacked at home and abroad for being too small.

The majority of Germans are skeptical that this second stimulus package will actually help shield Europe's largest economy from the global recession, according to a Forsa survey released on Wednesday, Feb. 13.

But Finance Minister Peer Steinbrueck came to the defense of the package, even while acknowledging that it forces Germany to take on a huge amount of new debt.

"Given the circumstances, we cannot stimulate the economy without increasing our debt," he said in an address to the Bundestag.

Peer Steinbrueck giving a speech in Berlin

Peer Steinbrueck warned against protectionism

Steinbrueck also warned against rising protectionist tendencies to combat domestic job losses, adding that he would address the issue with his counterparts at a G-7 weekend meeting of the world's richest industrial nations.

Combatting protectionism

"Germany has a huge interest in ensuring that the world does not make the same mistakes it made in the 1930s when countries competed to introduce protectionist policies," said Steinbrueck.

"We will have to do everything to ensure history does not repeat itself," he added, citing "buy American" pressures in the United States and a "put British workers first" movement in Britain.

As the world's top exporter, Germany is more vulnerable to a rise in protectionism than other European countries.

Steinbrueck's address came on the heels of the announcement that the domestic economy in the final quarter of last year had contracted by 2.1 percent compared to the previous three months, leading to a downward spiral that marks 2008 as the worst performing year since German reunification in 1990.

Poll shows Germans wary of stimulus package

However, the survey by polling concern Forsa, which was conducted for the weekly Stern magazine, found that 69 percent of Germans believe that the second stimulus package would not help Germany to weather the economic slowdown.

On Monday, the European Commission forecast that the German economy would contract by a further 2.3 percent by the end of this year, making the downward spiral the worst since the end of World War Two.

Disapproval of incentives for car buyers

Only one-quarter of those polled were confident that the stimulus package, which includes public spending on road and building projects, as well as benefits for new car buyers, would help to shore up the country's economy.

In a nation of enthusiastic motorists, where the auto industry has been especially hard hit by the world recession, nearly two-thirds of those surveyed said they even disapproved of the government's plan to offer 2,500 euros to car buyers who ditch their old clunkers for more environmentally friendly vehicles.

About three-quarters of those polled said they had no plans to take up the offer, with only 11 percent saying they were even considering making use of such an incentive.

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