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UPDATE 2-Germany says EU plans 130 bln euro growth plan

Published 11/19/2008, 01:21 PM
TGT
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(Adds EU Commission statement, background)

BERLIN, Nov 19 (Reuters) - The European Union's executive arm will next week unveil a stimulus package worth 130 billion euros ($164.1 billion) aimed at bolstering the bloc's economy, a senior German minister said on Wednesday.

The European Commission said it had not yet decided on the scale of the plan due to be announced on Nov. 26 and that it was too early to speculate on the final details.

But German Economy Minister Michael Glos said the commission plan, to be presented to a meeting of European leaders next month, would ask all 27 EU member states to contribute one percent of their gross domestic product (GDP) to the growth package.

"Overall it's about 130 billion euros that are to be deployed," Glos told a roundtable discussion on German television station n-tv, referring to the commission's proposals.

"Everyone is to fulfil the 1 percent target," he added, saying this would amount to around 25 billion euros for Germany, Europe's largest economy.

Asked about Glos's remarks, the commission said it had made no decision yet on the size or details of a stimulus package for the European economy.

"There is no political decision so far on the figure," commission spokesman Johannes Laitenberger said.

"It is too early to speculate about the size or detail of the recommendations."

Data released last week showed the economy of the 15 countries that use the single European currency has fallen into its first recession.

EU officials have dropped repeated hints that circumstances are such that member states should use the flexibility contained in the EU rules limiting national budget deficits.

The commission has given little away about the contents of the package, which is expected to include both a call for coordinated action by member states and possible support measures from the EU's own funds.

EU sources stress however that there is limited scope within the bloc's central budget for the type of massive investment needed to kick-start economic growth.

The auto sector in particular has been vocal in its calls for financial support but EU officials have insisted that any aid be temporary and targeted to goals such as helping them convert their product range to more ecological cars.

(Reporting by Andreas Moeser and Kerstin Gehmlich in Berlin, Mark John in Brussels; Writing by Mark John; Editing by Victoria Main)

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