By Gernot Heller
BERLIN, Nov 1 (Reuters) - German Chancellor Angela Merkel pledged on Saturday that her cabinet would back an 'extensive investment package' next week, which a government paper said would give the economy a 50 billion euro ($63.89 billion) boost.
Europe's largest economy is teetering on the brink of recession and, after last month putting together a 500 billion euro bank rescue package, Merkel and her government now want to introduce measures to help ordinary Germans.
'We want to ensure that as many jobs as possible can be kept and as many sectors as possible can continue developing well,' Merkel said in her weekly podcast.
'To this end, the government will give precise, lasting, resolute investment aid, geared towards sector-specific and quick investment possibilities,' she added.
The stimulus plans are due to go to cabinet next Wednesday.
The economy contracted in the second quarter and a government official told Reuters on Friday that gross domestic product (GDP) probably contracted by 0.25 percent in the July-September period, which would put Germany in recession.
Although official data Thursday showed the jobless rate fell to a new 16-year low of 7.5 percent in October, fears are growing the financial crisis will hit firms and lead to higher unemployment before next September's federal elections.
In a joint paper seen by Reuters on Saturday, the Economy and Finance Ministries said the stimulus package would generate some 50 billion euros in investments and contracts.
Economy Minister Michael Glos said earlier this week the package would introduce a range of steps worth up to about 30 billion euros to boost investment in Europe's biggest economy.
But the paper showed the ministries expected measures to secure corporate financing and liquidity would also assure some 20 billion euros in investments, creating a total value for the package of some 50 billion euros.
'The government's measures facilitate investments and contracts for companies, private individuals and municipalities in 2009 and 2010 to the tune of around 50 billion euros,' the ministries said in the paper.
The ministries added the government wanted to accept 'the full extent' of the reduced revenues and additional outgoings resulting from the measures, suggesting the package would be financed by issuing new debt.
'Due to the changes in economic conditions, a federal budget without (net) new debt in 2011 is not achievable from today's viewpoint,' the ministries said, adding the government would do everything it could to balance the budget as soon as possible.
Germany had aimed to balance the federal budget in 2011.
(Writing by Paul Carrel) ($1=.7826 Euro) Keywords: GERMANY ECONOMY/STIMULUS (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
BERLIN, Nov 1 (Reuters) - German Chancellor Angela Merkel pledged on Saturday that her cabinet would back an 'extensive investment package' next week, which a government paper said would give the economy a 50 billion euro ($63.89 billion) boost.
Europe's largest economy is teetering on the brink of recession and, after last month putting together a 500 billion euro bank rescue package, Merkel and her government now want to introduce measures to help ordinary Germans.
'We want to ensure that as many jobs as possible can be kept and as many sectors as possible can continue developing well,' Merkel said in her weekly podcast.
'To this end, the government will give precise, lasting, resolute investment aid, geared towards sector-specific and quick investment possibilities,' she added.
The stimulus plans are due to go to cabinet next Wednesday.
The economy contracted in the second quarter and a government official told Reuters on Friday that gross domestic product (GDP) probably contracted by 0.25 percent in the July-September period, which would put Germany in recession.
Although official data Thursday showed the jobless rate fell to a new 16-year low of 7.5 percent in October, fears are growing the financial crisis will hit firms and lead to higher unemployment before next September's federal elections.
In a joint paper seen by Reuters on Saturday, the Economy and Finance Ministries said the stimulus package would generate some 50 billion euros in investments and contracts.
Economy Minister Michael Glos said earlier this week the package would introduce a range of steps worth up to about 30 billion euros to boost investment in Europe's biggest economy.
But the paper showed the ministries expected measures to secure corporate financing and liquidity would also assure some 20 billion euros in investments, creating a total value for the package of some 50 billion euros.
'The government's measures facilitate investments and contracts for companies, private individuals and municipalities in 2009 and 2010 to the tune of around 50 billion euros,' the ministries said in the paper.
The ministries added the government wanted to accept 'the full extent' of the reduced revenues and additional outgoings resulting from the measures, suggesting the package would be financed by issuing new debt.
'Due to the changes in economic conditions, a federal budget without (net) new debt in 2011 is not achievable from today's viewpoint,' the ministries said, adding the government would do everything it could to balance the budget as soon as possible.
Germany had aimed to balance the federal budget in 2011.
(Writing by Paul Carrel) ($1=.7826 Euro) Keywords: GERMANY ECONOMY/STIMULUS (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.