Germans see Britain as deregulation role model

GERMANY must draw on Britain's experience with deregulation as a key means of speeding up its drive for improved competitiveness, Gunter Rexrodt, the economics minister, said yesterday.

Presenting the government's economic report for 1994, Mr Rexrodt said Britain had 'achieved exceptional results in breaking down bureaucratic obstacles to starting up new businesses and managing existing companies'.

Mentioning privatisation and regulations on getting permits, notably for construction, as two areas of particular interest, Mr Rexrodt said he would be looking at proposals from the British government's commission on deregulation.

'Our own deliberations have not got so far, nor have they been so successful,' Mr Rexrodt said. He added that regular consultations were taking place at official level between London and Bonn.

Mr Rexrodt emphasised deregulation as part of a wide-ranging breaking of taboos and encrusted habits in industry and the economy. He said it was essential if Germany was to regain its previous dynamism and power.

Last year's recession, which was harsher and deeper than anything experienced hitherto, had forced a change in thinking, he said.

Mr Rexrodt defended the government's forecast for 1994 of GDP growth of 1-1.5 per cent in all Germany, and 0.5-1 per cent growth in the west, as 'on the border of optimism but realistic'. The government's five independent economic advisers had earlier forecast zero growth for western Germany.

He pointed to a number of encouraging factors such as low- wage settlements, record low long-term interest rates and recovery in the US.

He conceded that the western German economy might shrink slightly in the present quarter but this would lead on to steady growth.

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