Sunday 24 September 2017

Germany lists us in 'special economic zone' plan

Thomas Molloy

Thomas Molloy

Proposal for wider tax breaks would hit our competitiveness

THE German government has developed a proposal calling for special economic zones to be created in Ireland, Portugal and Greece.

Under the plans, foreign investors could be attracted to those zones through tax incentives and looser regulations.

While Ireland already has low taxes and relaxed regulations, competition from Greece and Portugal could hurt Ireland.

The far-ranging proposals also include forcing governments to set up organisations similar to the Treuhand trust created in Germany at the time of reunification, which sold off most of the former East Germany's state-owned enterprises.

The plan also calls for the countries to adopt Germany's dual-education system, which combines a standardised practical education at a vocational school with an apprenticeship in the same field at a company in order to combat high youth unemployment.

The plans were reported in the authoritative 'Der Spiegel' magazine, which often breaks stories about life in Germany.

The proposals are part of a six-point plan which the German government plans to introduce into the discussion on measures to stimulate economic growth taking place in the European Union.

The plan recommends that countries with high unemployment also adopt reforms undertaken by Germany, including a loosening of provisions that make it difficult to fire permanent employees and the creation of low-paid jobs where workers do not have to pay tax or social security contributions.

Germany has no minimum wage and most German workers earn less than their Irish counterparts.

Chancellor Angela Merkel is meanwhile coming under pressure from opposition politicians within Germany who want some sort of growth package in return for their support of the fiscal compact.

The fiscal compact can only become law in Germany if both the governing CDU and opposition SPD support the measure in the Bundestag or parliament.

The boss of the SPD party in parliament, Frank-Walter Steinmeier, said support for the compact is now conditional on a stimulus package.

"I guarantee you, there will only be a fiscal pact if it includes complementary growth elements," Mr Steinmeier said. "If they aren't in it, then the SPD will not agree to it."

Mr Steinmeier also called for the creation of a European debt repayment fund.

He said that euro bonds, which are currently being promoted as a way out of the crisis by French President Francois Hollande, could only be introduced "if they come with strict conditions and we have harmonised European economic and finance policy".

Irish Independent

Also in Business