Germany Rebuffs Call for More EU Fiscal Stimulus | Germany| News and in-depth reporting from Berlin and beyond | DW | 20.11.2008
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Germany Rebuffs Call for More EU Fiscal Stimulus

Germany has rejected calls to contribute more funds to a European Union fiscal stimulus package for recession-hit economies, with a government spokesman saying Thursday that Berlin was doing enough already.

A life buoy at the bank of the Spree River in front of the Reichstag in Berlin

Germany says its own bailout package should count for something

A 32-billion-euro ($40-billion) program of tax rebates, soft loans and handouts already approved by Berlin ought to be counted as part of the EU plan, Chancellor Angela Merkel's spokesman Ulrich Wilhelm said.

EU officials are drawing up the plan to be unveiled by the European Commission next Wednesday and submitted to EU leaders next month.

Briefing papers show the EU is to request all 27 member states to donate 1 percent of gross domestic product to revive weak demand.

Deal not good for Germany

But Wilhelm told reporters Germany would be disadvantaged if made to kick in more funds on top of money it has already pumped into the economy.

"Nations that have already acted in recent weeks should not be punished for it, while those who have done nothing end up better off."

He said that the fiscal stimulus approved so far, to be paid for by Germany's municipal, state and federal governments, was pumping 1.3 percent of GDP into the economy.

The briefing document on the EU fiscal stimulus proposals was obtained by German news agency DPA from government sources.

The money is to be focussed on the hardest-hit sectors such as automobile manufacturing and construction.

Germany's own package comprises 20 billion euros, comprised mainly of cuts to payroll levies decided in October and 12 billion euros, mainly in tax rebates for new-car buyers and soft loans, decided Nov. 5.

'Flexible' stimulus package

European Commission President Jose Manuel Barroso

Jose Manuel Barroso insists tight coordination among EU member states is a no-brainer

In Brussels, the Commission declined to comment on the size of the EU stimulus package, despite German Economy Minister Michael Glos commenting Wednesday that the deal would be worth around 130 billion euros ($164 billion).

"What we need is a coordinated European Union response, big enough, bold enough to work in the short term, yet strategic and sustainable enough to turn the crisis into an opportunity in the longer term," European Commission President Jose Manuel Barroso said Thursday. "The plan will be a timely, targeted and temporary fiscal impulse."

Barroso said the financial panacea would not be a one-size-fits-all solution, but would use all flexibility available under EU budget rules.

"Everybody suffers from the crisis and everybody needs treatment, but not everyone needs the same pill," he said.

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