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Business

Merkel Calls for Industry-Specific Ideas to Boost Economy

Chancellor Angela Merkel has asked her economy and finance ministers to come up with proposals to stimulate targeted industries in an effort to reduce the impact the financial crisis is having on Germany.

German Chancellor Angela Merkel, left, Matthias Wissmann, Chairman of the German Car Industry Association, second left, and Daimler AG CEO Dieter Zetsche, right, look at a power cable as they stand next to an electric powered vehicle during the 'e-mobility Berlin' event in Berlin, Germany, Friday, Sept. 5, 2008.

Sales of low-emission vehicles, like this electric car, could be targeted by the proposals

Merkel's spokesman, Thomas Steg, said the request came at a cabinet meeting on Monday.

"The chancellor spoke out specifically against a vague, traditional, wide-ranging credit and economic program financed by new borrowing," Steg told reporters at a regular news conference.

"But what could be helpful in this situation are very precise, very targeted measures to stimulate investment for certain industries," he said.

German media reports said measures being floated included stimulating sales of low-emission cars, and giving state guarantees on loans to small- and medium-sized companies.

The proposals need to tick the boxes of being convincing, affordable, and easily implemented, Steg said. They will be included in discussions about the government's 2009 draft budget, due to finalized next month.

Rescue package to help wider economy

The government last week pushed through a 480-billion-euro ($650 billion) rescue package for banks, though Steg was keen to stress that the package would also support the wider economy, not just struggling lenders.

But some experts are worried that the package alone will not be enough to stave off a crippling recession, especially given that Germany's economy is heavily reliant on exports.

Germany's central bank, the Bundesbank, warned that the global slowdown is already impacting the country, writing in its October report that the economy likely stagnated in the third quarter.

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