Steinbrueck: Germany Doing Enough for EU in Recession | Business| Economy and finance news from a German perspective | DW | 01.12.2008
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Steinbrueck: Germany Doing Enough for EU in Recession

Germany is already doing its share and would not spend more money to help lift the European Union out of recession, the country's finance minister Peer Steinbrueck said Monday.

German Finance Minister Peer Steinbrueck

Peer Steinbrueck says Germany won't contribute more funds to fight financial crisis

"Germany is putting 31 billion euros ($39.5 billion) on the table," Steinbrueck said in Brussels. "That is 1.25 percent of our gross domestic product. I am not sure everyone has properly registered this."

Steinbrueck and his fellow euro zone ministers were meeting to discuss the European Commission's economic recovery plan, which will have to be approved by heads of state and government at a summit due to take place Dec. 11-12.

The plan calls on member states to mobilize 170 billion euros, or 1.2 percent of their GDPs, in extra spending and tax cuts. A further 30 billion is to come from the EU's budget and the Luxembourg-based European Investment Bank (EIB).

Governments are also being asked to better coordinate their economic policies to ensure that decisions taken by one member state do not have adverse effects on other EU economies.

Minimize deficits: Steinbrueck

EU Commissioner for Economy and Monetary Affairs Joaquin Almunia

Joaquin Almunia says EU ministers would back bloc-wide rescue plan

But with many governments lacking any room for maneuver -- Italy, which has Europe's largest budget deficit, has so far announced measures totaling just 6 billion euros, or 0.30 percent of its GDP -- Europe's locomotive, Germany, is under pressure to help lift the entire bloc out of recession.

But Steinbrueck made clear his government would not bail out other member states. He insisted Monday on the need to stick to the EU's stability and growth pact, which calls on member states to keep their budget deficits to within 3 percent of their GDPs.

"I am not sure that deficits of 6 or 7 percent (of GDP) would increase the credibility (of the euro)," he said.

Germany, along with France, has also said it would not follow Britain's lead by reducing standard rates of Value Added Tax (VAT), as requested by Brussels.

Avoid protectionism: EU commissioner

Joaquin Almunia, the EU's economic and monetary affairs commissioner, said finance ministers would nevertheless back the commission's economic recovery plan.

"I am confident that the euro group and EU member states will provide an adequate reaction to this slowdown and risk of recession," Almunia said.

The commissioner also called on member states to resist any "protectionist measures," for instance by seeking to relax the EU's strict rules on the kinds of state aid can be provided to struggling businesses.

"The (state aid rules) should be interpreted in a way that does not hinder the economic situation (while) preserving the (bloc's) internal market," Almunia said.

Diplomats note that the sum of money that governments will be willing to contribute to the commission's 200-billion-euro recovery plan will not become apparent until shortly before the December summit.

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