German political leaders have launched their latest stimulus plan, worth 50 billion euros, saying they will do everything they can to help Europe’s biggest economy survive the world financial crisis. It follows criticism that Berlin has been too timid up to now.
“With this package we underline the size and importance of the world economic crisis,” said Chancellor Angela Merkel. “But equally, it shows our determination to overcome the problems ahead.” The German economy has long been the motor driving the financial heart of Europe. It has not shrunk by more than one percent since World War Two, but some economists fear there is a risk it may contract by more than two percent this year. The plan involves a combination of new investment in infrastructure, plus modest tax cuts and financial guarantees for struggling German companies.