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Germany's government agrees further stimulus plan

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Germany's government agrees further stimulus plan

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Germany’s governing coalition has agreed a fresh stimulus package worth 50 billion euros aimed at helping Europe’s largest economy through what could be its worst recession since the Second World War.

After six hours of negotiations, Chancellor Angela Merkel’s Conservatives and their Social Democrat partners agreed a mix of investment spending and tax cuts. Chairman of the SPD parliamentary group, Peter Stuck, told reporters: “This deal is mainly about joint investment, financed by the federal state, the regions and communes to the tune of around 18 billion euros. We are going to take action to fight unemployment and redundancies, in addition, we are going to boost consumers’ purchasing power by lowering taxes and deductions, also in the region of 18 billion euros.” This was the final point on which the coalition parties narrowed their differences, agreeing a set of compromises that allowed all sides to claim victory in the battle just eight months ahead of September’s federal election. The entry level tax rate will drop by one point to 14 per cent, while the threshold for tax-free households will be raised slightly. Workers’ health insurance contributions will also be lowered. There will also be incentives worth two and a half thousand euros for new car purchases. Officials also say the total business package for German firms, including credit guarantees, could amount to 100 billion euros.