BERLIN - CRITICS on Tuesday dismissed the biggest stimulus package in German postwar history as too little, too late to shore up Europe's top economy.
Just weeks after Finance Minister Peer Steinbrueck blasted neighbours' 'crass Keynesianism' for their costly recovery plans, the ruling coalition agreed on steps worth 50 billion euros (S$98.2 billion) over two years.
It is a second, stronger shot in the arm for the world's number one exporter after Chancellor Angela Merkel's first, 12-billion-euro effort in November fell short, and comes nine months before she will stand for re-election.
Finalised in late-night talks between Merkel's CDU conservatives and the centre-left SPD, it includes 17-18 billion euros in investments in roads and schools and nine billion euros in tax cuts for firms and individuals.
It also includes a 100-billion-euro loan guarantee programme to help stricken companies hobbled by the credit crunch, according to a copy of the agreement obtained by AFP.
Other elements include a one-off, 100-euro extra child benefit payment, and sweeteners to persuade reluctant consumers to buy new, environmentally friendly cars to boost Germany's struggling auto sector.
It also includes cuts in health insurance contributions for employers and employees to slash the cost of job creation and put more cash in shoppers' pockets, and simpler rules on creating temporary work.
'All in all this is a package that will help us to get through this economic crisis and keep jobs,' Mr Volker Kauder, head of the CDU group in parliament, told reporters.
But critics blasted the measures, much of which will only take effect on July 1, as too restrained to reverse what economists warn will be the worst recession in six decades.
'It is ridiculous to believe that such puny amounts could stabilise the economy,' the leader of the opposition pro-business Free Democrats, Guido Westerwelle, told the Muenchener Merkur newspaper, calling for deeper tax cuts.
The chief executive of the German Chambers of Commerce and Industry, Martin Wansleben, said firms would need more tax relief 'before this legislative term ends' in September, in an interview with the Frankfurter Rundschau newspaper.
The head of the Trade Union Federation, Michael Sommer, told German radio that much of the package offered only 'cosmetic' help for the economy and had little praise for the tax plan.
'It is too expensive, will do little to boost consumption or jumpstart the economy ... and is not covered in the public budget,' he said.
The German press was equally sceptical.
'Given that we are facing the worst economic crisis for 80 years, this package - de facto no more than one percent of GDP - is quite small,' the left-leaning daily Tageszeitung said in an editorial.
'The asymmetry is odd, and the half-heartedness is risky.' Meanwhile the conservative Frankfurter Allgemeine Zeitung said it was troubling how quickly both the conservatives and the Social Democrats abandoned their calls for fiscal responsibility in the face of the crisis.
'The state is taking over control of the economy,' it said.
'Good luck Germany.'
Data in recent months have made it clear that Europe's biggest economy is going south, with industrial orders and output falling off a cliff and unemployment on the rise in December for the first time in 33 months.
Unemployment now stands at three million, and economists fear one in 10 workers will be out of a job by the time of the general election in September.
Meanwhile GDP could shrink three percent this year.
Negotiations on the package saw a bitter battle between the governing parties, which were forced into a coalition in 2005 when neither won a ruling majority with their partners of choice in the general election.
As a result, they were keen for the massive package to bear their own signature.
The cabinet is due to decide on the stimulus package over the coming week before the lower and upper houses of parliament vote in late January or early February. -- AFP
