Germany drawing up plan to support growth

Germany drawing up plan to support growth

BERLIN - Agence France-Presse
Germany drawing up plan to support growth

People are seen enjoying cafes in one-time divided German city of Berlin. A draft plan to support growth includes the creation of special bodies to privatize state-owned enterprises, resembling the sales of assets in East Germany after the unification.

Germany is developing a six-point plan for boosting growth in Europe, a German news weekly reported on May 25, amid a heated debate among EU leaders on how to best help indebted eurozone states.

The plan, being worked on by the German government, includes setting up special economic zones in crisis-hit countries which could woo investors with lower taxes and less regulation, Der Spiegel said, without revealing its sources.

It also includes the creation of special bodies to privatize state-owned enterprises, along the same lines as when the assets of the former communist East Germany were sold off following German unification, the magazine said in a copy of its latest edition.

In addition, the proposals included labor market reforms, such as making it easier to hire and fire employees and bringing down wage costs.

The plan further entailed proposals to boost on-the-job training for young people, similarly based on the long-established German model, the magazine said.

Consumer confidence steady

Consumer confidence in Germany, which has taken a knock from high oil prices in recent months, is currently holding up in face of the eurozone debt crisis, a poll found on May 25.

Market research company GfK said its household confidence index was steady at 5.7 points for June, unchanged from May, a statement said.

“Consumer sentiment in Germany is stable going into the summer,” GfK said.

“Consumers are noticeably more optimistic with regard to the economic outlook than they were a month ago and the propensity to spend has increased moderately,” the institute said.

“Despite recessionary tendencies in Europe and rising uncertainty from the debt crisis, people see the economy growing. Elections in France and Greece have had no negative effects” on sentiment, it added.

The headline consumer confidence reading is based on responses from around 2,000 households on their expectations about pay and the economy as a whole in the coming months, as well as their willingness to spend money.

On May 24, the key Ifo business climate index unexpectedly dropped sharply in May, bringing to an end a six-month rally and casting a cloud over the hitherto strong performance of Europe’s biggest economy.

Meanwhile, French consumer confidence continued its slow improvement in May but remains below the long-term trend, the INSEE national statistics office said on May 25.

The household sentiment index compiled by INSEE edged up one point to 90, it said, putting it back at levels last seen in late 2010.

In December, the index was at 80, its lowest level since December 2008 as the global financial crisis deepened following the collapse of US investment bank Lehman Brothers.