December 1, 2008

Europe torn over recovery plan

European Union member nations appear torn over a $252.5 billion economic recovery plan Monday in advance of a meeting in Brussels set for Tuesday.

France and Britain are pushing for a large-scale response to the economic slowdown, but Germany, representing the region's largest economy, is balking at the concept, the Financial Times reported Monday.

German Chancellor Angela Merkel ruled out significant tax cuts, the Times reported. Finance Minister Peer Steinbruck said the nations volunteering for increased deficit spending were like lemmings rushing to throw themselves over a cliff.

Luxembourg, the Netherlands, Poland and others appeared ready to side with Germany, the Times reported.

French President Nicolas Sarkozy chided Germany, saying France was working on a stimulus package, while Germany was thinking about options.

Germany's participation is critical, an EU diplomat said.

Germany is far and away the biggest EU economy and a major source of demand for exports from other EU states. The more demand in Germany, the more growth in Germany, the better for all of us, the diplomat said.