16 March 2009

Clashes Ahead of G20

Germany's relative strength in current times has meant that other countries are being seen to rely on this. While the economy there has been predicted to shrink 2.3 per cent this year, it is the speed at which it is likely to recover that is giving it status as a beacon. According to EU watchdogs, Angela Merkel's stance on tax cuts and emergency spending has amounted to 3.3 per cent of GDP.

While Barack Obama's administration believe that more cash injection will boost the global economy - which is set to shrink for the first time since World War II - Germany and France will argue that now is not the time to spend more money.

Speaking ahead of forthcoming G20 summit meetings to commence on 2nd April, Merkel has said that it is now key to introduce and set a regulatory system which will prevent this kind of "economic catastrophe" from being repeated. She called for more "transparency of financial markets" during the speech, which was seen as a direct attack of Obama's administration. Obama's response was to try and compromise: more stimulus yet also more regulatory reforms.

So what has Germany done so far in its fight against the recession? Since late last year, it has implemented 100 billion euros to boost liquidity for companies, and a further 82 billion in other measures, including a money exchange of sorts, by offering vehicle owners premium for new, energy-efficient vehicles if they scrap old ones.

So far, Obama's administration has passed funding, last month seeing $787 billion put into place to boost the US economy. That, so far, is more than all European Union countries who have put forward around 400 billion euros.

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