Merkel and Brown to Meet As Recession Fears Mount | Germany| News and in-depth reporting from Berlin and beyond | DW | 27.10.2008
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Merkel and Brown to Meet As Recession Fears Mount

As fears of recession grow, German Chancellor Angela Merkel will meet with British Prime Minister Gordon Brown this week to discuss the crisis in the financial markets, her spokesman said Monday.

England's prime minister standing at a podium, giving a speech

Gordon Brown presented an economic rescue package that hasn't allayed fears of a recession

The two are to meet Thursday in London and speak to the media afterwards, spokesman Ulrich Wilhelm said. Merkel is also to pay a visit to Queen Elizabeth II at Buckingham Palace.

Germany and Britain have unveiled the biggest rescues of banks outside the United States, but the moves have failed to counter a slide in world stock markets which is being seen as a harbinger of a global recession.

Merkel's coalition is debating pump-priming to counter the effects of a business contraction. Her party supporters from the CDU (Christian Democrats) have suggested cuts in taxes on motor vehicles and a possible income tax rebate.

Action expected soon

In Berlin, Finance Minister Peer Steinbrueck said he expected action this week or next.

Steinbrueck said he and his own Social Democratic Party (SPD) opposed tax cuts because taxpayers might simply move their gains into savings instead of spending them, or might import more rather than buying home goods.

Stressing the urgency of action, Steinbrueck said after meeting with his party in Berlin that tax cuts might also not gain traction till next year when many people receive their tax findings.

The finance minister said his party favored job creation by encouraging municipalities to speed construction of day cares and schools and by lending money to the mittelstand, Germany's web of medium-sized companies.

Further options available

Other options include soft loans and subsidies for new home-heating and home-insulation work. Those projects are popular in Germany as they also reduce oil and gas use and help cut carbon dioxide emissions.

Steinbrueck, who has won praise in recent weeks as Germany's chief firefighter in the crisis, said he was also studying backing private investment in public infrastructure and European-level aid to car manufacturers.

He stressed that no decisions have been made by the government yet as of how to proceed.

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