'Wise Men' see only modest growth

16th November 2003, Comments 0 comments

12 November 2003 , BERLIN - The German economy will grow by up to a modest 1.7 percent next year, Berlin's panel of independent economic advisers said Wednesday, with the government's planned tax cuts expected to generate only a small economic impulse.

12 November 2003

BERLIN - The German economy will grow by up to a modest 1.7 percent next year, Berlin's panel of independent economic advisers said Wednesday, with the government's planned tax cuts expected to generate only a small economic impulse.

In releasing the report, the five-member panel's chairman Wolfgang Wiegard said the successful launch of Chancellor Gerhard Schroeder's EUR15.6 billion package of tax cuts will only help to boost Europe's biggest economy by 0.2 percent.

"Hopes for next year are based on a continuation of the global recovery and that the spark from foreign demand also ignites the domestic economy," the so-called "Five Wise Men" said.

The opposition-controlled upper house of the German parliament, the Bundesrat, last Friday blocked the reforms and referred them to a special parliamentary mediation committee which is expected to reach a deal by the end of the year.

If the government and the opposition reach a compromise on Schroeder's tax plans, the panel believes that introduction of the tax cuts will result in a growth rate of 1.7 percent next year.

The German economy will not grow at all this year, after it sunk into recession during the first six months, the panel said in its autumn report.

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