German Finance Minister Hans Eichel was quoted on Saturday as saying he was firmly opposed to proposals to raise government spending to stimulate the economy because they were expensive and ineffective. In an interview with the Frankfurter Allgemeine Sonntagsjeitung newspaper to appear on Sunday, Eichel also renewed his opposition to cutting corporate taxes as Economy Minister Wolfgang Clement has proposed.
"Spending programmes that boost the economy are same thing as the Loch Ness Monster - they don't exist," Eichel said, dismissing calls from some left-leaning members of his Social Democrat party to raise spending in an attempt to boost growth.
"They just cost a lot of money and the effects quickly fade away," he added. "There won't be any economic stimulation programmes financed with new borrowing."
Eichel said that the government channelled 10 billion euros into eastern Germany following floods in 2002 but that even that amount had no lasting impact on growth.
"That didn't leave any trace on Germany's economic growth," he said.
Eichel said corporate taxes in Germany were already low enough.
"Sure, best of all would be to pay no taxes at all," Eichel said. "We have to be careful we don't make foolish mistakes here. The claim that the tax burden is too high cannot be proven whatsoever."
The German government is forecasting economic growth of 1.6 percent in 2005, but independent economists have warned that is far too optimistic.
On Tuesday, the head of the government's panel of economic advisers, Bert Ruerup, said he expected the economy to grow 1 percent this year, down from the panel's earlier 1.4 percent projection.
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