Merkel to block climate reforms that risk jobs

“The EU summit will not pass resolutions that endanger jobs or investments in Germany,” she told the paper. “I will make sure of that.”

The chancellor, who has recently been criticized for sluggish action against the global financial crisis, also said she would ask the EU to approve government spending more quickly to counter the economic downturn. She said she would pressure leaders to “quickly realise more flexible rules of competition in the construction of broadband cable networks” which would “make Europe fit for the 21st Century.”

Next Sunday, Merkel will also host high-level expert talks about how to tackle the financial crisis in the coming months, she said. “For a targeted answer to coming economic developments we need a comprehensive and thoughtful analysis, to which I will invite selected experts,” she told the paper.

The meeting will not end in a concrete stimulus package, though. “The coming Sunday will be about gaining the most clarity possible about the economic development in 2009,” Merkel said. “I am there to be open to all options. But I won’t openly speculate about a different possibility each day,” she said.

However, Economy Minister Michael Glos defied Merkel on Sunday by issuing an urgent call for quick tax cuts to battle a deepening recession in Europe's biggest economy.

Glos, a member of Merkel's conservative bloc, told Bild am Sonntag newspaper that Germans needed tax relief before the general election in September 2009 if they are to contribute to an economic revival.

"A tax cut for average earners ahead of the election would send the right message," he said. "People who work hard to advance the gross national product should get more from the fruits of the labour."

Merkel has repeatedly ruled out across-the-board tax reform until after the general election, despite persistent calls for tax relief from business leaders and the Christian Social Union (CSU), her CDU's Bavarian sister party.

Glos, a member of the CSU, said tax breaks could have a powerful "psychological" effect and motivate Germany's notoriously tight-fisted consumers to get out and shop.

"The tax decrease could be introduced on July 1 or made retroactively effective January 1, 2009," Glos said. "Where there is a will there is a way."

The head of the Federation of German Industry, Jürgen Thumann, renewed his call for quick tax cuts to fight the economic crisis in a statement issued Sunday. "It would have a positive effect on growth and employment," he said.

And executives from eight major German companies, including Volkswagen, Adidas and BASF, are quoted in the upcoming issue of Der Spiegel news weekly saying the government has not done enough to combat the economic slowdown.

"We are facing a situation that is absolutely extraordinary - and we cannot emerge from it with the traditional political and economic approaches," Volkswagen boss Martin Winterkorn said.

The CDU and CSU campaign together as a bloc in national elections. Despite the economic downturn, they enjoy a double-digit lead in the polls against their closest rivals, the Social Democrats, who are junior partners in Merkel's grand coalition.