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Germany

Report: Merkel Expects "Year of Bad News" for Germany

German Chancellor Angela Merkel said she doesn't have high hopes for 2009. There's little chance for an economic recovery next year, she said in a newspaper interview.

Merkel at a press conference

German companies should not lay off employees to bridge tough times, Merkel said

Despite the government's efforts to ease the effects of the global financial crisis on the German economy, Merkel said next year would be a difficult one.

"We have to expect that the coming year, at least in the initial months, will be a year of bad news," she told the weekly newspaper Welt am Sonntag in an interview to be published Sunday, Nov. 23. "We have stabilized financial markets with the rescue package but trust still needs to return."

The government would focus its efforts on protecting German jobs, she adding that companies should not be tempted to lay off workers during the economic downturn.

Merkel: Growth will return

A man walking on a bridge in cloudy weather with boats in the background

Berlin is trying to offer companies a port in the economic storm

"We know that growth will return after the crisis and then skilled workers are going to be urgently needed," Merkel said Saturday in her weekly video podcast.

She added that the government would examine ways of helping companies bridging difficult economic times and maintain staff levels until "a time when growth is again possible around the world."

The world financial crisis has pushed the global economy into a tailspin, forcing Berlin and other governments to unveil stimulus packages aimed at underpinning economic growth. Germany also announced a 500 billion euro rescue plan to help its financial sector weather the current upheaval.

An additional 12 billion euros in aid that federal government hopes to provide businesses, but which has not yet been discussed by German lawmakers, would be spent "in such a way that Germany's future prospects and strength in innovation will be strengthened," she said.

EU funds to promote innovation

Network cables plugged into a server

The EU should help ensure broadband Internet access is available across the bloc

Merkel also said European companies should make use of the EU's package to support innovation.

"We should use the current situation to make Europe ready for the future, particularly in places that are not technologically up-to-date," she told the Welt am Sonntag.

The chancellor called for broadband Internet access for all Germans while speaking at a national IT summit on Thursday.

Data released last week showed the German economy tipping into recession, with growth shrinking by a bigger-than-forecast 0.5 percent during the third quarter, on top of a 0.4 percent contraction in the second quarter.

A slew of major indicators and data to be published next week are forecast to confirm the economic deterioration is underway in Germany with business confidence declining again and the long run of falling unemployment in the country coming to an end.

On Friday, the government said a decline in tax revenue as a result of the contraction in Europe's biggest economy had forced it to boost borrowings by 10.5 billion euros to meet plans for spurring growth.

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