8 per cent of tax revenues from July 2007

When a Minister of economy said that "there is no reason to panic", as did Michael Glos, mid-August, to comment on the latest economic indicators in Germany, it often must be understood that in fact there is good reason to be worried.

The German economy is, de facto, to the more wrong since the beginning of the legislature. After a first quarter, it is true, very robust with a winter that did not deserve the name, GDP declined by 0.5 in the next three months. The indicators published yesterday on the morale of the industrial and the consumer foreshadow a Q3 very low. Maybe again in decline. A technical recession is becoming more and more likely. Most economic forecasters revise downward their expectations. The Government, that table again, officially, on a growth of 1.7 this year, seems them optimistic. And 2009 promises to be more difficult.

The cause of this economic weakness is simple: the gloom of German consumers. They are the ones who should take over, this year, international trade, penalized by the slowdown in major markets export (France, United Kingdom) and the business investment. The GfK index, intended to measure the morale of the consumer, is the lowest for five years. Substantial upgradings grubbed up by the unions to employers, in the winter, in many branches, should encourage expenditure. It was effective without inflation, the highest for 12 years in July, at 3.5. The price increase still faster (8.9), of the never-seen since 1981. According to the regions and the heating mode, the energy costs of households has increased by an average of 25 in one year, be a puncture from more than 20 billion euros on their budget for this year. And this is not finished. EnBW has announced further massive tariff increases for the fall.

In this context, many distributors depressed. Karstadt stores are in red, Metro wants to get rid of the Kaufhof chain. Shops clothing SinnLeffers filed balance sheet. The Germans now spend 25 less than fifteen years ago to dress. Bio food brands dive, while the superdiscounters, Lidl in mind, triumph. In opinion polls, the higher prices down the unemployment at the top of the concerns of the Germans.

Scraping, you can isolate some good news. The labour market should continue to improve. The reforms led by Gerhard Schröder have flexibilisé it, companies have much degreased in the last downturn, and the retirement of baby boomers help. The number of unemployed should continue to decrease, 3.2 million next year. With the decline expected oil prices, raw materials and food inflation should reflow, not if only tentatively, in the coming months. Thirteen months of legislative, Government cannot confine itself to these thin stories of hope. Gamberge.

The great coalition, just to celebrate without great enthusiasm its thousandth day of existence, knows that it has little room for manoeuvre. It has of budgetary consolidation so far the alpha and the Omega of its action. Orthodox Minister of finance, the Social Democrat Peer Steinbrück, obtained the support of Chancellor Merkel when painful arbitration had to be made. There is no less that the Spanish recovery plan raises German interest. As well as cheques sent to American taxpayers by the Bush administration who helped us, to make less sullen than expected spring.

The Institute of Hamburg conditions find it helpful to do the same. The Minister of economy, including the Bavarian party, the CSU, allied to the Christian Democrats, has a few setbacks to a month of regional elections, also advocates for tax relief. For Günther Beckstein, Minister-President of Bavaria, this would not renounce the deficit reduction: it is enough to save on other positions. And the latest available figures show very opportunely, to July, an increase of 5.8 per cent of tax revenues from July 2007. The public surplus in the first half reached EUR 6.7 billion, or 0.5 of GDP. A pot

The Christian-Democrat staff does not categorically reject the idea of fiscal support to the economic conditions. He announced the end of the year the submission of a concept of tax reform. It also refers to a decrease in contributions to unemployment insurance, 3.3 to 3. Management approves and claims even down to 2.5. Even the Peer Steinbrück janséniste mounted in his Department a reflection cell, in which he asked, according to the "Spiegel", suggestions "coming out of beaten" to increase the purchasing power.

Las, a major obstacle is appeared on the road to a support plan conditions. The Bundesbank strongly advised, in its latest report, to go this route. The fine-tuning"tax is problematic, according to it. It would only get a straw fire without Relighting the consumption fires. Similarly, it rejects any reduction in unemployment contributions. The risk would be great, if conditions worsened, the available reserves are shrinking and must therefore meet the contributions at the wrong time, with a pro-cyclique effect. The Buba advised to the contrary the "wait and see" and relies on the famous "automatic stabilizers". It is however a recommendation of Economist, not policy.

The Christian democratic camp and the social democratic camp, Coalition reluctantly for three years now, want each stand and foothold in September 2009. To do this, they must regain voters earned by the three opposition parties, that government inaction would strengthen certainly. The liberal left party, Die Linke, seeks more social aid for the poor. The Liberal Party occurs as champion of the tax cuts. The Greens enjoy sky-high energy prices to call for a technological revolution. The two major parties must widen the meninges and what say the Central Bank, cannot stand idle while waiting for a hypothetical recovery of global demand. The Social Democrats would take a great risk if they favoured inertia in expecting that the Germans would pay the price for their Christian-Democrats, dominant partners in the coalition. The winner of the parliamentary will certainly be the camp to be the most démené to lead the way for renewed growth.