A “reality-sandwich” was delivered to the German people earlier today by the leader of their government Angela Merkel. This after the last couple of days of euphoric international attention and celebration to commemorate the reunification of the two Germanys, 20 years ago. She did not mince her words when she addressed the German Parliament and gave a rather pessimistic review of the present domestic economic situation the country finds itself in and saying that the woes in the global financial markets could hit severely Germany in 2010.
In her first policy speech since her re-election two weeks ago, she gave a dismal assessment of the German economy – this clearly a U-turn from her words earlier this year, who was then facing re-election. At that time she clearly stated that Germany would weather any financial storm which may arise.
Her one hour speech did not mince words – Germany has some way to go before emerging from the economic crisis saying that…” the problems will get bigger before things get better.” She spoke of an unprecedented challenge – the largest since reunification. She mentioned the immense costs relating to the integration and enhancment of social and economic conditions of the former East Germany. Up to now this has already cost the nation €1 trillion.
She said that……….“without growth, [there would be] no investment and without growth, no jobs; without growth, no money for education; without growth, no support for the weak.”
Currently unemployment stands at 8.3 percent, which she says will rise even further.
The government will introduce tax cuts amounting to circa €24 billion for fiscal year 2010 and increased in 2011. These tax cuts come despite the growing German budget deficit.
In 2011, the German government plans to embark on changes to the tax system that will entail lowering taxation rates but also overhauling a system notorious for its complexity. The new system tax system Merkel has promised is to be simplified, lower and fairer.
Tags: angela merkel, Berlin, chancellor, germany, merkel, News
