Germany Acts On Recession

Press, Volume CVIII, Issue 31763, 21 August 1968, Page 10

Germany Acts On Recession

“Concerted action” had been successful in measures taken by West Germany to deal with its economic recession, said Dr H. A. Wuttke, a German banker, in Christchurch on Monday. Dr Wuttke told a Chamber of Commerce luncheon that top-level talks had been instituted among trade pinions, employers’ associations and Government representatives under the chairmanship of the Minister of Economics. The purpose was to arrive at a common judgment of the

economic situation and to cooperate by following a policy that was not contradictory to the necessities of a sound and growing economy. Dr Wuttke said that the German economy had been gradually recovering since the northern autumn, and the gross national product was now expected to increase by 5 per cent this year. Positive results of the recession were the stabilisation of prices and an end to the dangerous trend of rising wages and salaries. “The German trade unions very soon realised that a continuation of their earlier aggressive wage policy would inevitably lead to a higher

unemployment rate during the period of recession,” he said.

He said that the recession forced businessmen to show more Initiative and to be more price conscious.

“Another encouraging outgrowth of recent experience has been the use. for the first time in Germany, of flexible budgeting as an element of stabilisation policy," said Dr Wuttke.

Under the law on the promotion of economic stability and growth which came into force in June, 1967, fiscal policy has to be adjusted to cyclical conditions. The authorities not only have the power to introduce the necessary measures but are also bound to undertake forward budget planning over a five-year period in order to promote stability. He said that West German economic success meant more export opportunity for other countries. A very liberal import policy had been adopted so far and Germany was willing to sticl? to it, but with the formation of the Common Market, members were gradually losing their autonomy in trade policy. “The negotiations of the Kennedy Round have, however, proved that West Germany is capable of exerting a liberal influence also on those partners in the E.E.C. which were used to following a protectionist policy,” he said.

Dr Wuttke said Germany’s imports from New Zealand last year amounted to $24.4 million, and its exports to New Zealand about $3O million. This represented only about 0.15 per cent of Germany’s total imports and exports, and he was convinced that there were many more opportunities for business transactions of all kinds “which must only be seized.” This was proved by the action of three German shipping lines trying to get traffic rights to New Zealand.

Dr Wuttke said that Germany would have to keep a watchful eye on the further implementation of the E.E.C.’s agricultural policies “in order to make sure that your export of agricultural products will not be affected too much.”

He said that Germany would certainly favour some special arrangements between the E.E.C. and New Zealand when the United Kingdom did join the Common Market.