Cost of flood damage in Germany 'at least €25bn'

The cost of repairing damage from the German flood disaster will be at least €25bn (£16bn), far higher than even the most pessimistic of first estimates suggested, the German authorities say.

The cost of repairing damage from the German flood disaster will be at least €25bn (£16bn), far higher than even the most pessimistic of first estimates suggested, the German authorities say.

Chancellor Gerhard Schröder described the floods as the worst catastrophe to strike Germany since the Second World War. The new estimate follows inspection of the damage in Saxony, the state worst affected, where the water has now largely receded. Finance officials there said the devastation was infinitely worse than they had feared and that at least €15bn could be needed.

Residents returning to their homes were instructed yesterday to be ruthless in destroying damaged household goods and food to prevent plagues of rats.

The cost of flood damage in other afflicted states is likely to be more than €10bn, according to officials in Berlin. But with floodwaters still rising lower down the Elbe and tens of thousands of people still being moved, that figure could also be exceeded. The new forecast of the total cost is about two- thirds higher than the initial estimate of €15bn.

With the general election less than five weeks away, Mr Schröder has taken the politically high-risk decision to freeze public spending and postpone promised tax cuts to offset some of the cost of the disaster. The European Union has also offered help but mostly by taking a flexible attitude to the use of various EU funds already allocated to Germany. The amount of new money on offer will probably be no more than €1.2bn.

Yesterday's revised estimates made it likely that the German government will have to make savings as well as defer tax cuts. Mr Schröder has called the premiers of the länder, or states, to Berlin today to decide what money is needed and how it will be raised.

The premier of Bavaria, Edmund Stoiber, who is challenging Mr Schröder for the Chancellorship, has indicated that his centre-right Christian Social Union and its allied Christian Democratic Union will not block the postponement of tax cuts but will set terms before agreeing to back the accelerated passage of a new tax bill through the Bundestag. He is suggesting a one-off increase in corporation tax.

Parts of Bavaria, including the city of Passau, were badly damaged by the flooding of the Danube but had nothing like the disaster that affected the Elbe river system in eastern and now northern Germany.

The Bavarian authorities were last night trying to avert a pollution disaster, after an oil barge started to leak a petrol additive into the Danube. The barge, laden with 1,000 tons of alkylate, collided with the gates of a lock near Straubing, and all 12 tanks were torn open. Police said the alkylate was confined within the closed lock but there was a risk of an explosion.