Some of Germany’s largest companies are pledged to avoid mass job cuts as part of Berlin’s response to recession. The German Chancellor, Peer Steinbrück the German finance minister, and Axel Weber the Bundesbank president, have agreed a second multi-billion euro fiscal stimulus package to be refined in coming weeks and put in place early next year.
'Under the plan, large companies would renounce mass redundancies for a period yet to be defined, in return for a rise in government subsidies for employees placed by companies temporarily on shorter working time or lower wages.' (reports the FT). In this way the resources of skilled labour will not be run down or lost.
“The focus of the government will be on measures that will not just benefit the economy right away but also have a positive, long-term structural impact,” said a source; attention will be on large-scale infrastructure investment. Communications, education, and a cut in mandatory health insurance contributions are central. The weekend meeting, of government and business leaders in Berlin on Sunday, with 11 companies represented, including Josef Ackermann of Deutsche Bank, Peter Loescher of Siemens and Rene Obermann of Telekom, centred on not cutting jobs next year. The Chancellor has scheduled a further meeting in early January 'with heads of companies listed in the Frankfurt stock exchange’s blue-chip Dax-30 index to finalise the package. The government declined to confirm its details.' (FT)
Germany has so far committed €12bn in growth-boosting measures spread over two years. Notoriously in outright rejection of New Labour's analysis and policies for the devastation the United Kingdom economy has been brought to, Germany (and many other continental European member-state governments) has refused absolutely to raise deficits to boost consumption, either by cutting income tax, value added tax, or providing consumer tax hand-outs. Raising the savings rate in the majority of eurozone economies is only too easy. Mr Steinbrück, having ruled New Labour's cut in VAT as costly and ineffective, considers longer-term investments as 'the right thing to do' (to borrow a peculiarly New Labour phrase.)
Infrastructure investment, subject to local and regional authorities' planning restrictions, is likely to exceed €10bn, and the sixteen state premiers will meet with the Chancellor on Thursday to agree a list of projects advanced enough to be completed quickly. The European Commission’s relaxation of state aid and procurement rules will help.
Berlin will finalise the measures to be undertaken so far on January 5. They will be set out publicly after President-elect Barack Obama, who is sworn in on January 20, has provided details of the fiscal stimulus being prepared by the United States' new government, and taking this into account.
Subscribe to:
Post Comments (Atom)
Posts
4 comments:
Alternatively:
Germany enjoys a huge competitive margin over Southern Europe who are being broken by the German Mercantilism. However, Germany refuses to boost demand by lowering taxes etc. instead it seeks export subsidies (for that is what keeping jobs in factories at lwoer wages is) to maintain is manufacturing base.
meanwhile, southern europe slowly is asphyxiated. When it expires the euro may end and German manufacturing will decline anyway.
it is called beggar-thy-neighbour and nobody wins. China and Germany are not the heroes, they are villians as much as the US and Uk are.
At least our exchange rate shields us somehwat from the damage that will be inflicted across Europe
Mercantilism is presumably not the 17th century version but a word for the German export drive and reliance on it. They are no more mercantilist than I am a physiocrat, despite my new found farming persona.
If they can do it while being part of the eurozone and in spite of a strong euro, why should we need the protection of a falling currency to attempt their performance, City?
What scenario would bring about the demise of the euro?
There have been no voiced concerns about German productive capacity stifling any member state.
Germany is us, the European Union, the core, together with northern Italy, eastern France, Belgium, and aspirant eastern member states.
Crasskeynes is not keynesianism.
Keynes would acknowledge Merkel's policies; he wouldn't give the time of day to Brown.
I shall add Joan Robinson to the Heroes, not least for her work on bastard keynesianism.
with respect you miss a few things. All the eurozone is up in arms against germany. Read Ambrose-Evans Pritchard.
If you export and limit your own consumer demand you are mercantilist. Germany does this; it is as bad as consuming whilst producing nothing.
The imbalance this creats threatens the euro as deficit countries cannot cope with the exporters deflation. Look at the spreads between Italian and German bonds
When it comes to finance, City, 'missing a few things' is a very kind way of putting it. Angels do power and dominion by nature too, so analytic tools are not much in evidence there either.
If Germany is beggaring-its-neighbour my thoughts turn to who are the neighbours and what is meant by Germany. Not so much what are the confines of the Federal Republic, but what are the confines of the economic area that has a similar mercantilist practice?
Just as the London economy based on financial dealings carries the economic deadlands of the rest of the UK, so the economic, manufacturing and industrial heartland of Europe carry the deadlands in parts of their states. Even whole states whose offering is not economically advantageous, but geostrategic.
Making an intuitive grab at what member states incline towards, Poland, the Czech Republic, Slovakia, Hungary, the Baltic states, and candidate states like Turkey and the Ukraine are going for industry and manufacturing with high levels of research and development input coupled with drawing on extensive indigenous cheap labour provision. (And cheap does not imply poorly educated, low-skilled or denatured).
The UK can't do this. The financial trading post model was chosen at the time of the big bang and industry and manufacturing let slide. That was fine under political rule from the right. But we have political rule from the self-seeking that depends on the votes of the left, who believe in all sorts of dissonant narratives deeply rooted in the values of the German model.
Our best hope was to accept ourselves as a larger Switzerland, adopt a similarly democratic, new constitution embodied in law, and get on with our new millennium role. Our poor country tripped over the power-seeking desperation of New Labour that, behaving like a hermit crab to get to power at all, dare not cut off the mad and freakish fringes, from public service trade unions to greenery-yallery, to welfare rights, that is their coalition support.
Neither dare they take up Switzerland's stance towards the EU, amiable but separate, and democratic, and local, because another strand of their coalition is peopled by raving Fabian do-gooding-by-force, one worlders.
Gosh, a paradigm stand-off at the heart of the European vision.
We need a general election not on the technicalities of our response to the degeneration of our London-generated financial services-based economy, but on our political choices: withdraw in a friendly way from the EU; stop pretending that the Labour party can provide policies or even beliefs that can be put into practice any more, and replacing New Labour's corrupt elites with democratically supported realism.
Post a Comment