Germany's worst jobless rate since 1932

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The Independent Online
Germany is on course for busting the Maastricht limits this year, burying European Monetary Union under a mountain of government debt. As unemployment soared again last month to a post-Weimar peak, matching the rate in 1932 shortly before Hitler came to power, official statistics released yesterday showed that economic growth was faltering. Chancellor Helmut Kohl had pinned his hope on a growth rate of 2.5 per cent this year, which might have been just enough to keep the budget deficit under the 3 per cent permitted by the Maastricht treaty. But, according to the latest figures, the economy is not growing at all, and may even experience a mini-recession this winter.

Growth is set to resume in the summer, but economists predict it will not be enough to make up for the shortfall. Leading institutes have revised their forecast to 2 per cent, which would force the government to overshoot its budget ceiling. If it does, it will be the third year in a row that Germany has failed to meet the standards it had itself set for member states of the currency union. This is the final year for applicants to put their house in order, and Mr Kohl has pledged that there will be no tinkering with the criteria.

The final decision rests, ironically, with the Bundesbank and the German parliament. While the central bank might be inclined to turn a blind eye, there are enough Euro-sceptics on all sides to thwart such a manoeuvre.

The government's only option, therefore, is to trim its spending yet further, which could throttle the economy and throw thousands more out of work. The opposition is not likely to watch that spectacle with folded arms.

One way out would be to allow a referendum on the euro. But Chancellor Kohl has ruled that out, arguing that referendums were far too Weimarian.