- Title: GERMANY: Cabinet backs new stimulus package
- Date: 28th January 2009
- Summary: FRANKFURT, GERMANY (JANUARY 27, 2009) (REUTERS) VARIOUS OF CARS IN THE STREET
- Embargoed: 13th February 2009 02:43
- Location: Germany
- Country: Germany
- Topics: Economic News,Domestic Politics
- Reuters ID: LVA5GKNO0X8UQ8EB1PZ9LE6JH8VV
- Aspect Ratio: 4:3
- Story Text: Germany's cabinet approves a 50 billion euro stimulus package which includes a so-called "Scrapping Bonus" for cars to help boost the country's ailing car manufacturing sector.
German Chancellor Angela Merkel's cabinet approved a record 50 billion euro second stimulus package on Tuesday (January 27) and a supplementary budget to pay for it that includes tens of billions of euros in new borrowing.
The package, the second agreed by Berlin's "grand coalition" as a response to Germany's deepest recession, includes investments in infrastructure, modest tax cuts and relief for the country's struggling auto industry.
"With the stimulus package we are aiming to build a bridge for companies and employees. We want to keep as many jobs as possible in our country and we want to make sure that we don't just survive the financial crisis but that we come out of it even stronger than when we went into it," Merkel told reporters in Berlin.
The so-called "Scrapping Bonus", which comes as part of the latest package, is aimed at boosting Germany's car industry which has suffered severly as a result of the financial crisis. Certificates worth 2,500 euros are to be issued for all new car buyers who scrap cars that are at least nine years old.
Car showrooms in Europe's largest economy have been filled with buyers in recent days since the government announced the plans.
"It has all had a very positive effect. Even if the lawmakers have not given a guarantee, the customers are still there. We have more people in the showroom and people are asking specifically about the cars. They are coming in and telling us that they have an old car which they want to scrap and want to know what deals there are. People are even buying cars already," Bernd-Uwe Prochnow, manager of a Volkswagen showroom in Frankfurt told Reuters.
In December the German automotive industry association VDA slashed its 2009 car sales target to 2.9 million due to the economic crisis; 3.09 million were sold in 2008. Germany's car industry, which directly and indirectly employs more than 1.1 million people, is one of the country's most important sectors in and a bastion of its export-dependent economy.
The economic crisis has hurt German carmakers. Many have trimmed working hours, extended holiday periods, temporarily closed factories and cut jobs to reduce output. Volkswagen, Daimler, BMW and Porsche have shortened hours at some plants.
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