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Last Updated: Wednesday, 12 November, 2003, 18:41 GMT
'Wise Men' warn on German budget
Chancellor Gerhard Schroeder
Chancellor Schroeder's tax reforms have met with resistance.
Germany will grow by between 1.5% and 1.7% next year after a stagnant 2003, a government panel of independent economic experts has predicted.

But although 2004 is set to be better than this year, the outlook remains bleak.

The panel said it expected Germany to remain in breach of the European Union's budget deficit rules.

It was also critical of the way that planned tax cuts for next year are being introduced.

Reform

The 'Five Wise Men' panel's report contained few surprises, as its growth predictions were within the range of German government predictions.

Similarly, the statement that Germany will breach the Stability Pact both this year and next is not new, although it restates unpleasant economic figures the government would rather not hear.

The panel's praise of labour market and welfare reforms is more positive.

But even here, they underline that it is unclear how much will be implemented, with the key bills still making their way through Parliament.

Professing free-market zeal, ministers cannot resist the sort of meddling that harms German business

The panel gave a cautious welcome for the tax cuts planned for next year, but noted that the way they are being introduced could hinder the economic recovery.

Last week, Chancellor Gerhard Schroeder's ambitious package of reforms aimed at kick-starting Europe's largest economy hit a brick wall.

The opposition-controlled upper house of parliament rejected plans to speed up 15.5bn euros ($18bn) of tax cuts.

It also vetoed labour law changes.


SEE ALSO:
Big loss hits German bank
12 Nov 03  |  Business
German government reforms vetoed
07 Nov 03  |  Business
Germany reduces growth forecast
23 Oct 03  |  Business
Germany falls into recession
14 Aug 03  |  Business
Germany's cold economic winds
14 Aug 03  |  Business


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