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Schroeder's big speech
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November 10, 1998: 6:26 a.m. ET
Promises of reducing unemployment and lower taxes fall on hard ground
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LONDON (CNNfn) - Germany's new chancellor, Gerhard Schroeder, made his keynote speech to the Bundestag Tuesday, promising to cut unemployment and lower taxes.
Schroeder announced an "alliance for jobs" bringing together employers and trade unions in a December meeting in an effort to combat long-term unemployment. There are currently 4 million jobless in Germany, 10.6 percent of the workforce.
The German stock market wasn't overly impressed by the comments, falling 1.5 percent by mid morning.
Analysts were skeptical about plans to reduce unemployment significantly. Stefan Bergheim, economist at Merrill Lynch in Frankfurt pointed out that structural changes are needed to combat unemployment, and that GDP for 1999 - expected to be in the region of 2.0 percent - would not be strong enough lower the jobless rate.
Elisabeth Legge, economist at Bankgesellshcaft Berlin, said Schroeder's plans for tax reforms "will make it even harder for German industry to remain competitive".
Schroeder also called for lower interest rates, echoing earlier comments by new finance minister Oskar Lafontaine.
Schroeder advocated a Europe-wide approach to tackling economic problems, pointing out that the presidency of the European Union would rotate to Germany in the six months from January.
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