Berlin gears up for newgrowth, jobs action plan

3rd March 2005, Comments 0 comments

3 March 2005, BERLIN - Germany's Social Democrat-Greens government, shaken by a rise of 750,000 jobless so far in the new year, is considering a programme to prime the economy and to map out new policies together with the conservative opposition, top SPD officials said on Thursday. Faced with a crucial election in Germany's most populous state, North Rhine-Westphalia in May, party officials said Berlin is looking at measures to give immediate relief to medium-sized industry in order to help boost the econo

3 March 2005

BERLIN - Germany's Social Democrat-Greens government, shaken by a rise of 750,000 jobless so far in the new year, is considering a programme to prime the economy and to map out new policies together with the conservative opposition, top SPD officials said on Thursday.

Faced with a crucial election in Germany's most populous state, North Rhine-Westphalia in May, party officials said Berlin is looking at measures to give immediate relief to medium-sized industry in order to help boost the economy.

In another development, Chancellor Gerhard Schroeder, currently visiting Arab nations in the Gulf region, issued a statement saying his government is willing to hold talks with the Christian Democratic Union/Christian Social Union (CDU/CSU) in pursuing further reforms.
The developments come amid a sense of shock in the German capital two days after the latest unemployment figures were issued, showing a rise of 177,000 jobless in the month of February.

It also follows the Social Democrats' unexpectedly poor performance in last month's election in the northern German state of Schleswig Holstein. 

Together with the 573,000 rise reported in January, Germany's unemployment rolls have increased by some 750,000 to some 5.22 million for a rate of 12.6 percent.

The Berlin government has steadfastly pointed out that the rises have mainly reflected the new social welfare and labour reform laws which took effect 1 January under which for the first time social welfare recipients are listed as being jobless.

But amid concern that Germany's economic upturn is shaping up to be much weaker than forecast at the outset of the year, and with crucial state elections in the state of North Rhine-Westphalia approaching, the SPD-Greens government is under fire to take action.

According to the Berlin daily Tagesspiegel, the SPD-Green coalition was expected to review measures to prime the economy at the weekend after Schroeder returns from his tour of the Gulf region.

Sources in the coalition said that among others, the action plan would include providing financial support for medium-sized companies, whose investment needs were estimated at EUR 700 million.

The SPD's top economic policy man in parliament, Rainer Wend, told the newspaper Neuen Presse he favours an action programme even if it meant the danger of higher debts.

"We have reached a situation in which we cannot rule out pushing forward towards growth by means of greater indebtedness," he said.

His comments point to the fiscal dilemma facing the government. Berlin wants to rein in its finances in order to try to meet the European Union monetary stability budget deficit limit of three per cent, a target it has failed to reach in the past two years. Going further into debt to prime the economy will add to fiscal strains.

In the Yemen capital Sana'a, Schroeder issued a statement saying he was "gladly prepared" to accept an offer of talks made by CDU leader Angela Merkel and CSU leader, Bavarian Premier Edmund Stoiber, on Germany's future reform course, including corporate taxation reforms.

In the statement, a copy of which was acquired by Deutsche Presse- Agentur dpa, Schroeder also said that the "depressing" rise of unemployment was "mainly" due to the new social and labour reform rules. He reminded the opposition parties that they, too, had helped to shape and pass the reform legislation.

"We have introduced and carried out important reforms. We find ourselves in the middle of a process of change in our country. Together we bear the responsibility," Schroeder's statement said.

[Copyright DPA with Expatica]

Subject: German news
 

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