EU mulls 200-billion-euro stimulus package

(BRUSSELS) - European finance ministers grappled on Monday with how to coordinate their efforts to ward off recession, with Germany sounding reservations about EU plans for a 200 billion euros stimulus package.

"All member states are convinced of the need to react in the short term to this difficult economic situation," said EU Economic Affairs Commissioner Joaquin Almunia.

With the spectre of recession looming large, the European Commission called last week for a sharp boost to public investment and social spending across Europe while giving embattled consumers a range of tax breaks.

Finance ministers from the 15 nations sharing the euro were meeting in Brussels to give their first reactions to the proposed plan, which their counterparts from the full 27-nation will discuss on Tuesday.

While the commission's overall proposed packaged would be worth about 200 billion euros (253 billion dollars) or 1.5 percent of the 27-nation European Union's output, Germany and some other countries are uneasy about ploughing so much public money into the economy.

The European Commission aims to secure backing for the package from EU heads of state and government when they meet in Brussels at a December 11-12 summit.

Germany, Europe's biggest economy, prefers to stick to its own plans for reviving its economy.

German Finance Minister Peer Steinbrueck, who has criticised the commission proposals as "ineffective populist measures," insisted that each EU country should be able to tailor its response to the crisis without having plans imposed from Brussels.

"We shouldn't copy what all other countries are doing, but we must coordinate among us," he said as he arrived for the talks in Brussels.

Germany, one of the few EU countries heading into the current downturn with strong public finances, has resisted pressure to contribute more than other countries to the economic stimulus effort.

Instead Berlin has stuck to its plans to support the German economy -- Europe's largest -- with a package worth 31 billion euros over two years.

Dutch Finance Minister Wouter Bos said that how much money countries commit to reviving growth should be up to them and those that have managed their budgets prudently should not be asked to do more than those that have not.

"I don't think that a consequence of the commission proposal should be that the countries that have behaved well over the past years are now obliged to do more," he said.

Some economists also have their doubts about the EU plan, noting that 130 billion euros would come from national plans in Germany, France, Britain and Italy and the rest from EU funding.

ECOFIN Council