Japan, Germany to spend billions to ease recession

London, Oct 30 | Updated: Nov 1 2008, 04:39am hrs
Japan and Germany said on Thursday they would plough billions of dollars into their economies, hoping to provide a cushion against a deep recession and complement a series of expected interest rates cuts.

Japan, the worlds second biggest economy, unveiled a 5 trillion yen ($51 billion) package of spending measures to support its economy and Germany planned a range of steps worth up to 25 billion euros ($32 billion) to boost business.

A harsh storm seen only once in 100 years is raging, Japanese Prime Minister Taro Aso told a news conference. Under such circumstances, I am certain that what is most important is to remove uncertainties from the lives of people. A leading member of Germanys ruling Social Democrats (SPD) told a newspaper that the government planned to introduce a range of steps to bolster the economy next week. All together we are talking about a volume of perhaps 20 billion euros to 25 billion euros, Peter Struck, parliamentary floor leader of the SPD, which shares power with Chancellor Angela Merkels conservatives, told the Berliner Zeitung.

The package will include support for car makers and building renovation as well as tax breaks enabling companies to write off a share of their investments, German newspapers reported.

Governments are desperate to put measures in place to protect their economies against recession, which euro zone statistics suggested had hit much of Europe.

Economic sentiment in the 15-nation currency bloc plunged to its lowest level since 1993 in October, official data showed. These are very bad. Its a clear signal the euro area is in recession, said Christoph Weil at Commerzbank.

US data later on Thursday is expected to show the worlds biggest economy shrank in the July-to-September quarter.

Poor corporate earnings and forecasts for 2009 supported the view that the downturn would be long-lasting.

Britains WPP Group, the worlds second-largest advertising firm, said 2009 would be very tough after reporting third-quarter figures in line with expectations.