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Economics advisor says hundreds of thousands of jobs will be lost

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Economics advisor says hundreds of thousands of jobs will be lost
Photo: DPA
13:08 CEST+02:00
The German government’s newest economics advisor says a number of failing banks should be allowed to collapse, and predicted that hundreds of thousands of jobs would be lost in Germany.

Christoph Schmidt told the Tagesspiegel newspaper he did not expect a quick recovery from the current economic crisis.

“The state must allow banks which are neither capable of surviving, nor system-relevant, to go bust,” he said.

He said a reorganisation of the state banks was urgently necessary to dampen down the crisis. “If these seven weak institutions are not quickly made into one or two strong ones, the crisis will continue longer than necessary.”

But he warned, “The worst time of the crisis is yet to come – hundreds of thousands of jobs will be lost."

He said machine construction, car production and chemicals would be the worst hit, and said a depression could last a couple of years. “Up to eight quarters without growth would be entirely possible,” he said.

The German economy would not likely start to expand again until at least 2010, he suggested.

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