Germany to suffer

[Homicidalheathen]

BERLIN (AFP) – Germany said on Wednesday it would suffer its worst recession since World War II in 2009 with half a million more people in Europe's biggest economy expected to lose their jobs.

Germany's economy, which accounts for about a third of eurozone output, will contract by some 2.25 percent in 2009, the government said, as the sharp global slowdown hits demand for the country's all-important exports.

By the end of the year there will be another 500,000 Germans out of work, with the jobless rate rising to 8.4 percent over 2009 from 7.8 percent in 2008, it said.

The rise in unemployment is certain to add spice to campaigning ahead of general elections on September 27 when Chancellor Angela Merkel hopes to secure a second term.

"This economic downturn that we are unfortunately having to predict is without precedent in the postwar period, it is the biggest slump in Germany's recent history," Economy Minister Michael Glos told a news conference.

"The German economy is facing this year the greatest challenges since unification (in 1990). Germany is integrated into the global economy like hardly any other industrialised country."

Merkel's uneasy left-right "grand coalition" is currently putting the finishing touches to a 50-billion-euro (65-billion-dollar) stimulus package, the biggest in modern German history.

It includes a huge increase in spending on roads, railways, hospitals and schools. Other elements include cuts in tax and social security contributions, as well as incentives for consumers to buy new "greener" cars to boost Germany's ailing auto sector.

Glos said this programme would begin to bolster the German economy in the second half of 2009, helped by other countries' efforts to boost their own economies and thereby demand for German exports.

Germany entered a recession in the third quarter of 2008 with two three-month periods of shrinking economic output in a row. Preliminary figures last week showed that the slowdown accelerated sharply in the final quarter.

Unemployment hit three million in December, rising for the first time after almost three years of unbroken decline. Data have shown industrial orders and output falling off a cliff.

In recent years, German exports have been its source of strength but the global downturn has turned them into its Achilles' heel -- Glos forecast they would slump 8.9 percent this year.

Germany "is suffering more than other countries," said Henrik Uterwedde from the Franco-German Institute (DFI). "The real motor of the economy has always been exports while domestic demand has tended to stagnate."

The European Commission forecast on Monday that the 27-nation EU economy would shrink 1.8 percent this year but that it would grow 0.5 percent in 2010. Glos declined to give a forecast for Germany for next year.

Within the 16-nation eurozone, only Ireland was forecast to suffer a steeper slowdown, and in the wider EU, only Britain, Ireland, Estonia and Lithuania are seen experiencing a sharper slump.

Merkel also plans to set up a 100-billion-euro fund to help out firms struggling to secure sufficient credit -- or at least loans without painful interest rates.

Hard-up banks are still proving reluctant to dole out cash despite Berlin's 480-billion-euro banking sector package rushed through last year and firms have complained.

Commerzbank, the second largest lender, is set to be partially nationalised with Berlin taking a 25 percent plus one share stake in return for 10 billion euro in desperately needed fresh capital.

Stricken property lender Hypo Real Estate, the country's biggest casualty, has so far been given 42 billion euros in state guarantees to keep it afloat and the bank may see the state forced to come on board as part owner.

There are also persistent rumours that Berlin will set up a "bad bank" to take on lenders' toxic debts.

The Frankfurter Rundschau daily reported on Wednesday that a working group had been set up at the Bundesbank -- the German central bank -- to study the idea.

Related Searches:global slowdown jobless rate stimulus package

[Slogo]

And we remember what happened last time.

[candyman]

Yeah...not only were they oppressed by all the other nations that beat them...they also stood up and did something. Sure someone exploited their willingness to work. However, due to the times and the unique situation what they did is nothing different that what we would have done had we lived there.

So...you saying that they are gonna do it again? Cuz this time I can heed the call...