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BERLIN : The German economy is heading for a slowdown, albeit a transitory one, Chancellor Angela Merkel said Wednesday.
"We must prepare ourselves for a weakening of growth in Germany. But I'm convinced that the slowdown will not prove a long-lasting one," Merkel said in a speech to the Bundestag, the German lower house of parliament.
"Germany is strong. But Germany is going to go through a difficult period," the leader said in a parliamentary debate on her government's 480-billion-euro (655-billion-dollar) bail-out package for the country's banks.
The plan includes up to 80 billion euros in fresh capital for banks and 400 billion euros in guarantees in order to jumpstart stalled lending between banks.
Merkel urged the Bundestag to approve the package rapidly so as to help restore calm to the financial markets and shield the German economy -- the biggest in Europe -- from further harm.
Some of Germany's 16 states have expressed misgivings about the bail-out plans, since the regional authorities are expected to put up 35 percent of the money.
If enough of the states object, the package -- which was unveiled Monday in tandem with other eurozone countries -- may not pass through the upper house of the German parliament and become law by the weekend as Merkel hopes.
Merkel insisted, however, that it was not just about throwing banks a lifeline, but protecting the German economy as a whole.
"It's for the common good," she said.
"The state is the sole entity that can restore confidence between the banks, not in the interest of the banks themselves, but in the interests of our citizens."
And she continued: "I know -- never before has so extensive a package of legislation been put forward with such an ambitious timetable. I am aware that a lot is being demanded from all concerned."
Finance Minister Peer Steinbrueck also saw the stability of the financial markets as a "common good" that was indispensable.
The bail-out would not relieve the banks of their responsibilities, the minister insisted.
"But if there's a fire, it must be put out, even if it was an act of arson," Steinbrueck said.
The government has been at pains to stress that the package is not a blank cheque. In return it will take stakes in the banks and demand influence in company decisions, the payment of dividends and even bankers' salaries.
On Tuesday, leading economic institutes warned that the global financial meltdown had pushed Germany to the brink of recession, with Europe's biggest economy set to expand by just 0.2 percent next year at best.
The German economy ministry is scheduled to publish its own updated growth forecasts on Thursday and they, too, are expected to show minimal growth of between zero and 0.2 percent in 2009.
Germany was last in recession in 2002-2003.
- AFP /ls
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