Merkel sees economic boost in 2010
An economic stimulus package announced by her government is intended to pave the way for investment and employment until an economic recovery takes shape.
Berlin -- German Chancellor Angela Merkel said on Wednesday that 2009 would be a gloomy year for Europe's largest economy but predicted the situation would improve in 2010.
"Germany is very strong," she told the lower house of parliament. It was in a better position than other economies to weather the financial crisis, she said.
Merkel used a debate in the Bundestag on next year's budget to defend measures, taken by her coalition of conservatives and Social Democrats, to bring the German economy afloat and help it out of recession.
An economic stimulus package announced by her government over the past two months was intended to pave the way for investment and employment until an economic recovery takes shape.
She said, "2009 will be a year of bad news. That is why we are building a bridge to ensure things get better in 2010."
Merkel added that Germany was not in a position to combat all negative global trends and needed to act in coordination with the European Union and other nations as well as taking its own measures.
Recently, the European Union unveiled an economic recovery plan worth 200 billion euros (260 billion dollars) to help the 27 member bloc weather the recession.
Berlin's contribution to this is a 32 billion euro domestic stimulus package to be delivered over the next two years, which is expected to result in a 50 billion euro boost in consumption and investment.
The package includes higher family allowances and tax breaks for children as well as steps to encourage investment in energy efficient buildings and incentives for car buyers.
Merkel repeated Germany's position that it would not slash value added tax on goods, despite steps taken in this direction by Britain. She also indicated that other EU members would follow suit.
A decline in tax revenue resulting from contraction in the economy has forced the government to boost borrowings by 8 billion euros in order to meet plans for spurring growth.
The crisis prompted the government to drop plans for a balanced budget by 2011 but the goal should be to achieve this target in the legislative period following elections next autumn, she said.
Merkel appealed to German banks to take full advantage a more than 400 billion euro state rescue plan to help the financial sector weather the upheaval. So far banks had sought credit guarantees to the tune of 100 billion, she said.
The chancellor also warned against "nonsensical" penalties envisaged by the European Union for car manufacturer vehicles that exceed strict EU norms on carbon dioxide emissions.
Germany's ailing carmakers would be particularly hard hit by such measures, but Merkel hopes a compromise will be reached on the issue ahead of the next EU summit by mid Dec. in Brussels
At international level, the chancellor urged steps to ensure that efforts to stabilize the global economy do not become disadvantageous to developing countries and emerging economies.