• Germany's news in English

Merkel's coalition grapples with stimulus plan as elections loom

AFP · 12 Jan 2009, 13:53

Published: 12 Jan 2009 13:53 GMT+01:00

Facebook Twitter Google+ reddit

Merkel will chair a meeting on Monday at 1600 GMT between her conservative Christian Democrats (CDU) and their centre-left coalition partner the Social Democrats (SPD) to thrash out an accord on a €50 billion ($70 billion) rescue plan for Europe's economic powerhouse.

The package will include new investment in schools and infrastructure, simpler rules on creating temporary jobs and a €100-billion fund to guarantee loans for struggling firms is also on the cards, she has said.

While there is broad agreement on the size of the package, the parties remain divided on some of the fine print, with neither side wanting to seem ungenerous ahead of general elections in September and several state polls.

As the talks get underway, the main source of discord remains tax policy. The SPD wants to reduce the basic tax rate to 12 percent from 15 percent but the conservatives have sharply rejected this.

Economy Minister Michael Glos, from the CDU's Bavarian sister party the CSU, slammed the proposal as "not sensible," with another senior CDU official saying it stood "no chance" of being adopted.

On the other hand, the SPD is keen to raise the tax for top earners, a notion rebuffed by Merkel who says it would send the wrong signal at this time of crisis.

With at least half an eye on the opinion polls ahead of a national election on September 27, both parties have dropped initial opposition to tax breaks - a position they had maintained was key to maintaining a balanced budget. But as the parties play party politics ahead of the polls, the economic situation Europe's largest economy becomes ever more dire.

Unemployment is on the rise for the first time in 33 months with more than three million out of work while Berlin fears the economy could shrink by three percent this year - the sharpest dip for 60 years.

This is turning up the heat on politicians to stop their political jostling for position and instead to come up with an ambitious package of measures to halt the economic slide.

In an interview with the Hamburger Abendblatt daily, CDU secretary-general Karl-Theodor zu Guttenberg called on the "grand coalition" to clinch a "powerful and vast" package, and avoid getting tied up in "nebulous political considerations."

Christian Wulff, the CDU premier of Lower Saxony in northwest Germany, has charged that there had been "too much bustle and not enough leadership" in dealing with the crisis.

Story continues below…

Calls for action are not just coming from the political class in Berlin but from businesses and the media.

"We should not keep moaning about the situation but discuss the problems openly with the banks," president of the BDI business association, Hans-Peter Keitel, said in an interview with Der Spiegel on Monday.

An editorial in the influential Süddeutsche Zeiting complained the two coalition parties are "getting lost in party politics. "What will emerge from this is an economic package that offers something to everyone because each party wants to serve its own clients," the newspaper said.

Facebook Twitter Google+ reddit

Today's headlines
The Local List
Germany's top 10 most surreal sites to visit
The Upside-Down House, in Mecklenburg–Western Pomerania. Photo: Olaf Meister / Wikimedia Commons

From upside-down houses on Baltic islands to a fairy-tale castle near the Austrian border, Germany is a treasure trove of the extraordinary.

Bavarian critics back Merkel for Chancellor again
Photo: DPA

The Christian Social Union (CSU) have long delayed backing Angela Merkel as their candidate for Chancellor in next year's general election. But now key leaders are supporting her publicly.

Four taken to hospital after hotel toilet bursts into flames
File photo: DPA.

Four guests at a Nuremberg hotel were taken to hospital due to smoke inhalation early Monday morning after a toilet there burst into flames.

Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German towns, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

Student fined for spying on women via their webcams
Photo: DPA

Student from Munich fined €1,000 for spying on 32 different computers, using their webcams to take photographs, or record their keyboard history.

This is how much startup geeks earn in Germany
Photo: DPA

A comprehensive new survey of 143 startup founders shows how much you are likely to be earning at a German startup, from entry level all the way up to sitting on the board.

Man dies after beating for peeing near Freiburg church
The Johannes Church in Freiburg. Photo Jörgens Mi/Wikipedia

A middle-aged man from southern Germany has died after being attacked by a group of men who took umbrage with the fact he was urinating in the vicinity of a church.

The Local List
Seven German celebrities with uncanny doppelgängers
Former Berlin mayor Klaus Wowereit and actor Alec Baldwin. Photo: DPA; Gage Skidmore, Wikimedia Commons

Check out these seven look-a-likes of well known German figures - we admit that some are more tenuous than others...

Israel seeks to buy three new German submarines: report
A Dolphin class submarine. Photo: DPA

Israel is seeking to buy three more advanced submarines from Germany at a combined price of €1.2 billion, an Israeli newspaper reported Friday.

Here’s where people live the longest in Germany
Photo: DPA

Germans down south seem to know the secret to a long life.

10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd