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Tuesday, 23 October, 2001, 11:00 GMT 12:00 UK
Germany 'on the brink of recession'
Euro notes
The institutes have called for Europe-wide tax and interest rate cuts
Germany has suffered a sharp fall in growth this year and the recovery next year is likely to be very slight, a bi-annual report from the country's top six economic institutes has warned.

Europe's largest economy "is on the brink of recession", the report said, calling for tax cuts and lower interest rates across the European Union in order to secure a recovery in 2002.

Growth in Germany is expected to slip to just 0.7% this year from 3% in 2000, then next year it is expected to bounce back to 1.3%, according to the institutes' predictions.

The 11 September terrorist attacks on the US got parts of the blame for the economic slowdown.

Hurry, hurry

In a direct challenge to the Berlin government, the wise men have added their voice to German industry and oppostion demands for urgent measures to stimulate Europe's biggest economy.

They warn that without loosening the government's tight public finances, the risk of a recession will increase significantly.

Specifically, they say tax cuts planned for 2003 should be brough forward by a year.

"Finance policy needs to reflect the economic risk," the institutes insisted.

The planned 13.5 billion marks cuts ($6.2bn, 4.3bn, 6.9bn euros) are part of a 60bn marks tax-relief package that has been approved for the period 2001-2005.

There is much resistance from the government against an early release of any tax-cut packages since this would delay efforts to balance its federal budget by 2006.

Dr Heiner Brockman, trade and industry council
"The first priority is have budget consolidation"
See also:

16 Oct 01 | Business
Jobs woe for German economy
15 Oct 01 | Business
Siemens cuts 7,000 more jobs
15 Oct 01 | Business
Commerzbank sheds 3,400 jobs
11 Oct 01 | Business
Eurozone interest rates unchanged
21 Sep 01 | Business
German business confidence falls
16 Aug 01 | Business
German economy grinds to a halt
09 Aug 01 | Business
ECB sees 'sizeable' risks to growth
07 Aug 01 | Business
More gloom for German jobs
02 Aug 01 | Business
Eurozone rates left unchanged
18 Jul 01 | Business
Eurozone inflation dips
28 Jun 01 | Business
Europe defies calls for rate cut
14 Jun 01 | Business
ECB downgrades European growth
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