germany - eu adds to economic woes


EU-imposed high interest rates are adding to Germany's woes. Capital investment is falling. Germany's public sector deficit was £28.8 billion for the first six months of 2004, equivalent to 4% of GDP. So for the fourth year running, Germany has breached the EU's Stability and Growth Pact (in reality a Stagnation Pact). Germany still makes the largest contributions to the EU. Volkswagen is aiming to cut its wage bill by 30% in the next seven years.

During August, more than 100,000 workers took part in protests against the social democratic government's Agenda 2010 programme of drastic cuts in welfare and unemployment benefits. On 16 August, 20,000 workers marched in Leipzig, 15,000 in Berlin and 13,000 in Magdeburg.

The government is imposing an increase in the working week from 35 to 42 hours - equal to a 20% pay cut. This will not reduce the record number of 4.5 million unemployed (10.6% of the workforce). So much for any belief that the EU somehow gives workers a legal entitlement to a shorter working week, or to decent welfare payments! Indeed, across the EU, hours worked are rising: the average Czech worker, for example, does more than 2000 hours a year, a figure that has been rising steadily since the collapse of socialism.

The German government is also under enormous pressure over the EU Constitution: 80% of the German people want a referendum.