5 November 2001, 11:14 Ifo's Sinn says German economy in state of emergency, urges swift govt action
FRANKFURT (AFX) - Ifo research institute president Hans-Werner Sinn
said Germany's economy is in a state of emergency and urged the
government to act swiftly by taking measures to boost demand.
In an article he wrote for Handelsblatt newspaper, Sinn said the
danger of recession has become even greater since last month, after the
Ifo and five other research institutes have said that the country is on
the brink of recession.
"The (state of) emergency has arrived," Sinn said.
He said "now is the time" for the government to invoke the 1967
Stability and Growth law, which he said requires the federal states and
the government itself to take into consideration the "overall economic
equilibrium" when passing economic and financial laws.
Sinn said based on this law, budget consolidation must not be the
sole aim of government's policy.
"Because the overall equilibrium today has very clearly been
disturbed by lack of demand, the federal government and the states
should make use of the measures allowed by this law," Sinn said.
"The law was conceived for an emergency and allows swift action" on
the part of the government.
All the government has to do is pass laws, such as giving generous
investment credits and cutting income taxes by as much as 10 pct, he
said.
"The signs of a threatening recession have so clearly increased
that politicians are called on to act energetically," he said.
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