Germany not back at pre-crisis level

November 16, 2009 10:40:41 AM

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The German economy, Europe's largest, will need at least two more years until it recovers to its strength before the global financial crisis, Economy Minister Rainer Bruederle said on Sunday.

Data released on Friday showed that Germany, one of the world's top exporters, was on its way to recovery after its worst recession in six decades, but Bruederle pulled no punches when describing the pain still ahead.

"2010 will not be an easy year. I fear that the number of unemployed people will rise significantly," he told the Bild am Sonntag paper in an interview.

"To get back to the level of 2008, we will need at least two more years," he said.

Buoyed by some 80 billion euros (119 billion dollars) of cash injections from the state, the German economy expanded by 0.7 percent in the third quarter of this year, official statistics showed on Friday.

Berlin expects the economy to grow by 1.2 percent in 2010, following a historic contraction of five percent in 2009 as demand for goods "made in Germany" dried up around the crisis-hit world.

A report drawn up by influential economic advisors to the government on Friday was even more bullish, predicting growth of 1.6 percent in 2010.

On the vexed topic of car maker Opel, Bruederle reiterated his position that parent company General Motors must pay for any restructuring after it refused to sell the troubled unit to Berlin's favoured takeover bidder.

"It is the task of the parent company GM to overcome the problems at its Opel subsidiary. Parents must always deal fairly with their children," he said.

It was his understanding "that GM would cough up the necessary funds for Opel itself," he said, adding that if Germany's regional governments wanted to contribute aid, "that is their free decision."

GM believes it will need around three billion euros to turn Opel around, but a powerful German union boss said on Saturday it could cost more than twice that amount.

"I think that a restructuring involving a progressive strategy will cost more than six billion, or nearer seven billion euros," Armin Schild, an official at the IG Metall union told Wirtschaftswoche, a weekly magazine.

Berlin had provided a 1.5 billion euro bridging loan to keep Opel, and its 25,000 workers in Germany, in business, but Chancellor Angela Merkel has already made it clear that she wants her money back.