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Germany plans 100b-euro company financing scheme

(Agencies)
Updated: 2009-01-08 13:49

BERLIN  – The German government plans to offer up to 100 billion euros ($137 billion) in help for companies that are experiencing financing difficulties, the head of the parliamentary group CDU-CSU Volker Kauder said Wednesday.

The German government plans to offer up to 100 billion euros (137 billion dollars) in help for companies that are experiencing financing difficulties, the head of the parliamentary group CDU-CSU Volker Kauder, pictured here in December 2008, said Wednesday. [Agencies]

The assistance in the form of guarantees is designed for companies struggling to secure funding from banks or which are unable to raise capital in the financial markets, Kauder told the daily General Anzeiger newspaper, which issued a statement.

"As long as banks are not increasing their appetite to award loans, the public powers must make investments possible for our economy by making loans available," he said according to the interview to be published Thursday.

The German government offered 400 billion euros in guarantees to the banking sector in the midst of the financial crisis last year. The guarantees were designed to free up interbank lending, which had frozen.

State backing would help companies that faced problems in obtaining bank financing or issuing corporate bonds at reasonable rates.

The Financial Times Deutschland had reported earlier that the company guarantee plan was being considered by the government.

The German government is a coalition of the conservative CDU/CSU and the Social Democrat SPD.

Also on Wednesday, data showed that German unemployment in December rose for the first time in 33 months, with over three million people out of work as the recession in Europe's economic powerhouse begins to bite.

Putting further pressure on Chancellor Angela Merkel's government to counter what is forecast to be Germany's deepest post-war slump, the labour office said the number of jobless had risen in December by 114,000 to 3.1 million.

In recent months, the German jobs market has shown surprising resilience in the face of the economic crisis but officials and analysts warned that the tide had now definitely turned.

The labour office acknowledged that the "positive underlying trend" in employment had now changed.