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Merkel again rules out 3rd German stimulus package

Published 05/01/2009, 10:25 AM
Updated 05/01/2009, 10:48 AM
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BERLIN, May 1 (Reuters) - Chancellor Angela Merkel said Germany does not need to launch a third economic stimulus package, arguing in a newspaper interview to be published on Saturday that it would be counter-productive at this point.

Merkel told the Hanover-based Neue Presse that it was important to let the government's first two stimulus packages worth a total of 81 billion euros have an impact.

She had also rejected calls for a third package last month made by labour unions and the OECD.

"We don't need a third stimulus package with a new set of measures," Merkel said. "It would be counter-productive and would once again raise new expectations. We should let the investments already agreed take effect

"With our two stimulus packages we've got enough instruments that can help master the effects of the crisis."

She said, however, the government would carefully monitor the impact of those measures already enacted.

"And wherever necessary we'll react and further develop the instruments we have," she said.

She said the government had already demonstrated its ability to act quickly by expanding the "Kurzarbeit" subsidies for short-time work schemes for idled workers retained by companies by six months to a new total of 24 months.

Also, it extended the hugely popular "cash-for-clunkers" car incentive programme that has boosted demand for new cars, raising funds available from 1.5 billion to 5 billion euros.

"These are quite different than a third stimulus package," she said.

(Writing by Erik Kirschbaum; Editing by Victoria Main)

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