28 Jan 2009

Governments add to economic rescue plans

2:05 pm on 28 January 2009

Governments strung together lifelines to rescue their battered economies on Tuesday as the worldwide financial crisis that has cost trillions of dollars and claimed millions of jobs ground on.

Germany's cabinet sealed a stimulus package aimed at hauling Europe's biggest economy out of what is feared could be its worst slump for six decades.

The raft of measures is Germany's largest stimulus plan since World War II and includes a huge increase in infrastructure spending as well as sweeping tax cuts.

Japan pledged $US16.7 billion to the small- and medium-sized companies at the heart of its economy, while Britain announced it would guarantee up to 2.3 billion pounds in loans to its automakers.

Canada's minority government proposed a two-year, $US32 billion stimulus package, which will requiring opposition support to be set in place.

US President Barack Obama also went to opposition lawmakers to gain support for his $US825 billion stimulus proposal.

Republicans complain the bill's $US550 billion spending component is excessive, while its tax cuts of $US275 billion are not enough.

In Russia, sources told Reuters that the government was set to help top bank Sberbank and other lenders with a second bailout package worth more than $US27 billion.

One government source said Russia planned to offer Sberbank a 500 billion rouble loan.

Governments around the world have spent hundreds of billions of dollars on bank bailouts and fiscal stimulus, while central banks have slashed interest rates to record lows since a US housing slump burst a global credit bubble.