MercoPress. South Atlantic News Agency

Germany approves 50 billion Euro stimulus plan

Chancellor Angela Merkel

Germany has approved a 50 billion Euro stimulus plan aimed at boosting Europe's largest economy. The plan was approved by the upper house of parliament, which represents Germany's 16 state governments.

It includes infrastructure investments, tax relief, reductions in health care contributions and money for families with children. The package follows an earlier 23 billion Euro plan that was criticised for being too cautious. Chancellor Angela Merkel said that Germany would emerge from the crisis stronger than when it entered it. "We are operating on the principle that Germany is strong and therefore can come to terms with this difficult economic situation," Ms Merkel said. "With the biggest package in the history of the federal republic of Germany, we are also living up to our international responsibilities." The plan also provides 2,500 Euro bonuses to people who give up old cars to buy new vehicles. Germany's economy went into recession last year as the global downturn hit demand for exports. It is expected to contract more than 2% this year, its worst performance since World War II Earlier in the week the German cabinet agreed on a draft law that will allow it to temporarily nationalize troubled banks. The law would allow private sector banks to be nationalised through the seizure of their shares to support Germany's financial system. The draft law, which still has to be approved by the German parliament, said nationalisation would be a last resort. The law is seen paving the way for the government to take over stricken German property lender Hypo Real Estate. The lender's situation remains shaky despite a total of 102 billion Euros in guarantees it has received from the government and other banks since October. Finance Minister Peer Steinbrueck said at a press conference that Hypo Real Estate was a "system relevant" bank, and the draft law was designed to help the government stabilise it. He also said the government would exhaust all the other possible options before deciding on taking over Hypo Real Estate. If the nationalisation goes ahead, it would be the first takeover of a bank by the government since the reunification of the country. "The banking crisis has expanded into an acute crisis of the financial system. In this crisis situation, it is the fundamental duty of the state to restore trust in the financial markets and to prevent a further deterioration of the crisis," the draft says.