Germany and France Bolster the European Economy

 

As a result, the European Commission said in its spring forecast that prospects for 2011 looked “slightly better” than six months ago.

But it also raised some caveats, noting that the pace of recovery would be uneven across the 17-nation bloc for some time to come, that inflation remained a worry and “moreover, despite some improvement in labor markets, the prospect is for a rather jobless recovery.”

The powerhouse in Europe in recent months has been Germany, but the latest data showed that France was catching up. The two countries together account for nearly half the euro zone’s economic output.

The German Federal Statistics Office reported that gross domestic product grew 1.5 percent over the previous quarter, when harsh weather held growth to just 0.4 percent.

The figure was well above analysts’ estimates and showed that Germany’s economy had recovered fully from its worst recession since World War II. “The precrisis level of early 2008 has been exceeded,” the office said.

France, too, surpassed expectations with growth of 1 percent, the steepest increase since spring 2006, according to the statistics office Insee. That compared with an increase of just 0.3 percent in the last quarter of 2010, and a median forecast of economists surveyed by Reuters and Bloomberg News of 0.6 percent.

Over all, G.D.P. grew 0.8 percent in the euro area compared with the pace in the previous quarter, according to the European Union statistics office, Eurostat, somewhat better than economists had expected.

But the strains of austerity measures to rein in gaping deficits were evident as well.

Spain’s economy grew only 0.3 percent from the previous quarter, according to the National Statistics Institute in Madrid. Although that was slightly better than expected, it was largely attributed to exports amid weak domestic demand and high unemployment.

Portugal posted its second quarter of contraction, with its G.D.P. dropping 0.7 percent, according to Eurostat. The country is bracing for continued economic struggles as it awaits a 78 billion euro ($112 billion) bailout by the European Union and the International Monetary Fund. With the Finnish Parliament approving the bailout on Friday, European finance ministers are expected to sign off on the package early next week.

That approval had been threatened by the True Finn Party, which opposes bailouts.

Another struggling country, Greece, registered its first quarter of growth since 2008. Output grew 0.8 percent in the first quarter, according to Eurostat, compared with a decline of 2.8 percent in the final quarter of last year.

European stock markets and the euro both slipped lower. While economists called the reports encouraging, especially for Germany and France, they warned that keeping up the momentum would be difficult.

“Looking forward, we expect growth to slow down to more moderate rates, as world trade growth loses some momentum and fiscal policy tightening and higher oil prices kick in,” Aline Schuiling, senior economist at ABN Amro Bank in Amsterdam, wrote in a note. “Nevertheless, the German economy should continue to outperform the euro zone average by a wide margin.”

Oscar Bernal, an economist at ING Bank in Brussels, said that the pickup in industrial activity in France in particular “might just be a catch-up” after the year-end lull.

“All in all, we believe that the first-quarter G.D.P. growth acceleration will only be temporary,” he said, adding that the French government will still face difficulties meeting its budget-deficit reduction targets.

Strong demand for exports like automobiles has fueled the recovery in Germany, as in past recoveries. Domestic demand has typically trailed, leading to criticism from Germany’s trading partners. However, German consumers seem to be gaining confidence this time as unemployment falls sharply.

The German statistics office noted that compared with the last quarter of 2010, domestic consumption was up “markedly,” along with investment by businesses in machinery and equipment and construction.

“The growth of exports and imports continued, too,” it said. “However, the balance of exports and imports had a smaller share in the strong G.D.P. growth than domestic uses.”

The French statistics office noted that manufacturing production soared 3.7 percent in the first quarter, the strongest growth for at least 30 years. Household consumption was also up, but only slightly. Imports grew more rapidly than exports, weighing on the overall growth figure.

 

Al Qaeda Attack Was Thwarted By Three Arrests, Germany Says

BERLIN — The German police arrested three men suspected of being members of Al Qaeda on Friday, saying they represented “a concrete and imminent danger” to the nation and had been planning an attack using explosives.

The German authorities presented the bare outlines of a terrorism plot that they said involved at least one person trained at a militant camp in Afghanistan or Pakistan and a cache of material for producing explosives. The men had been under surveillance for seven months, but the authorities said they decided to move fast when the three began preparations for testing an explosive device.

“We succeeded in preventing a concrete and imminent danger,” the interior minister, Hans-Peter Friedrich, said in a statement that acknowledged assistance from foreign investigators. “This proves that Germany continues to be in the cross hairs of international terrorists, and we need to remain vigilant.”

The authorities said more information would be released at the federal prosecutor’s headquarters in Karlsruhe on Saturday, when the men would be brought before a judge. But some details emerged from law enforcement officials and the German news media, which said at least two of the men were Moroccan, one with German citizenship and the other living in Germany illegally. The third was said to be a German of Iranian descent, though some reports said he was of Moroccan descent.

It was not at clear if there was any connection between the arrests and the terrorist attack in Morocco on Thursday, when at least 16 people were killed after a bomb was detonated in a packed cafe in the popular tourist city of Marrakesh. But experts said it was likely that Moroccan and German intelligence services had recently cooperated.

The German news media reported that the three suspects had been taken into custody in the western state of North Rhine-Westphalia and that the authorities had confiscated materials for making explosives, including acetone, a volatile substance that terrorists often use. Officials identified the suspects only as Abdeladim K., Jamil S. and Ahmed Sh. German authorities do not typically release the names of criminal suspects.

According to the newspaper Bild, one of the men was from Düsseldorf and the other two were from nearby cities, Essen and Bochum. All three were arrested at 6:30 a.m. in raids in Düsseldorf and Bochum.

The target was uncertain. Bild, Germany’s most widely read and generally reliable newspaper, reported that the terrorist cell might have planned to hit the popular Eurovision Song Contest on May 14, though that event’s organizers said they had not been alerted to any such threat.

The newspaper Die Welt anonymously quoted an investigator as saying that the suspects were planning to attack public transportation in a large German city. An American official who was briefed on the operation said the plot was aimed at buses or depots.

The arrests and accusations, which combined elements of homegrown terrorism with concerns about the lawless Afghanistan-Pakistan border region, shook Germany’s sense of calm. The country was put on edge last year as well after a terrorism alert involving what the authorities said was concrete information of a planned attack.

The increased security measures established at public areas like transportation hubs had eased in recent months, but law enforcement had quietly continued to pursue leads on the threats aggressively, including a suggestion that terrorists planned to strike the Reichstag, home to the lower house of Parliament.

Wolfgang Bosbach, a member of the lower house and chairman of the Committee on Internal Affairs, said investigators had closely monitored travel to the Afghan border area and noted “a significant number of returnees.”

“The recent arrests must not surprise anyone who deals seriously with the matter,” Mr. Bosbach said.

The Rhine-Main region has a large population with ties to North Africa and is one of Germany’s centers of the Salafist movement, a radical fundamentalist school of Islamic thinking, along with Hamburg, Berlin and the region around Frankfurt, according to Guido Steinberg, an expert on terrorism with the German Institute for International and Security Affairs.

“We do not know yet exactly how big this is,” Mr. Steinberg said. “But that something could happen this year is anything but absurd. The Salafist scene has grown significantly in Germany in recent years. The number of converts has increased substantially as well.”

According to the official Germany News agency, the three men had planned to test an explosive on Thursday night, but delayed for some reason. The authorities said the men were arrested without previously issued warrants, perhaps indicating a decision to move quickly.

Souad Mekhennet contributed reporting from Marrakesh, Morocco; Jack Ewing from Frankfurt; and Eric Schmitt from Washington.

 

Demonstrators in Germany Demand End of Nuclear Power

BERLIN — An estimated 120,000 people demonstrated across Germany on Monday, protest organizers said, demanding an end to nuclear power and increasing pressure on Chancellor Angela Merkel’s government to speed up the closing of the country’s 17 nuclear plants.

Demonstrations that take place each year over the Easter holidays have tended in the past to be pacifist, for instance, calling for the end of the war in Afghanistan. But this year, because of the 25th anniversary of the nuclear accident at the Chernobyl plant in Ukraine, in addition the nuclear crisis at the Fukushima nuclear plant in Japan, the rallying theme was nuclear power.

Some of the biggest protests took place in the western state of Lower Saxony, where, according to the organizer’s spokesman, Peter Dickel, more than 20,000 demonstrators gathered near the Grohnde nuclear plant.

In the northern state of Schleswig-Holstein, 17,000 protested at the Krümmel nuclear plant, Mr. Dickel said.

In Bavaria, which has three nuclear plants, more than 15,000 people gathered near the Grafenrheinfeld power plant and thousands of others marched toward the Isar 1 and Isar 2 plants. “We are many, we will be more and we will not keep quiet until the last nuclear power plant is shut,” said Martin Heilig, an organizer of the demonstrations there.

Last month Mrs. Merkel imposed a moratorium on new nuclear plant construction. Seven of the oldest plants were temporarily closed, and the remaining 10 are undergoing security checks. She made it clear that she was going to reconsider her decision, made last year, to extend the life of the nuclear plants by an average of 12 years. “Japan had changed everything,” she said.

Mrs. Merkel has already set up two committees, one to consider how nuclear energy could be phased out earlier than the mid 2030s and the other to see what impact the end of nuclear power would have on energy prices. They are expected to complete their work by June.

Despite her U-turn on energy policy, the Greens party was swept into power in the state of Baden-Württemberg last month. It is the first time the Greens will head a state government. On Monday, Winfried Kretschmann, premier designate of the Green-led government in Baden-Württemberg, was putting the finishing touches to his coalition with the Social Democrats — thus ending 58 years of conservative government.

Stricter E.U. tests sought

Austria’s environment minister said safety tests for European nuclear plants must be mandatory and take into account the possibility of terror attacks, The Associated Press reported on Monday from Vienna.

European Union nations agreed last month to submit their plants to tests, but Nikolaus Berlakovich said Monday draft criteria for the tests do not go far enough and “must incorporate human influences such as plane crashes or terror attacks.”

 

Temp Workers in Germany Dismay Unions

 

Originally from the area around Erfurt in eastern Germany, Mr. Hintermeier has spent 15 years as a temporary worker, going wherever the jobs are.

“You’re doing the same work for less pay,” said Mr. Hintermeier, who earns about 9 euros, or almost $13, an hour. That is about $2.86 an hour less than the average for eastern Germany, and $7.16 to $8.59 less than in wealthier regions of the country, where Mr. Hintermeier often works.

On top of that, “there aren’t many opportunities to develop,” he complained. And he said he often encountered resentment from co-workers who consider him low-cost competition.

Mr. Hintermeier is one of nearly a million temporary workers, almost 3 percent of the work force, who in recent years have given German companies much more flexibility than before. Temporary employment played a critical role in helping Germany weather the 2009 downturn, as employers were able to quickly respond to ebbing demand by reducing payrolls.

But an increasingly vocal group of critics say that the loosening of regulations in 2003 allowing companies to hire temporary workers has created a vast cohort of poorly paid, poorly treated employees with slim chances of obtaining permanent jobs. With the economy surging once again, unions are lobbying for legislative changes and raising the issue of temporary workers at contract talks.

“Temporary work has enabled a shadow labor market,” Berthold Huber, chairman of the IG Metall labor union, said at a news conference in Frankfurt last week. “That is intolerable.”

Temporary employment, already a boom industry in Europe, is about to get more support when the last restrictions on labor mobility among European Union countries fall away on May 1 — coincidentally the day when Europe celebrates the labor movement. Temporary-employment agencies will then be able to recruit workers in low-wage countries like Poland for jobs in Germany and elsewhere.

“That will certainly raise the pressure,” said Sandra Siebenhüter, who has studied temporary work for the Otto Brenner Foundation, a research organization in Frankfurt that is financially supported by IG Metall.

While there are plenty of anecdotes about temporary workers who are receiving worse deals than permanent employees, the loosening of Germany’s traditionally rigid labor market has been crucial in preventing at least some companies from shipping production abroad.

“Our global competitiveness would deteriorate if we were unable to use the instrument of temporary employment,” Bayerische Motoren Werke, the maker of BMW vehicles, said in a statement, noting that 75 percent of its work force was in Germany, while 80 percent of its car and motorcycle sales were abroad.

At the heart of the debate is the question of whether a temporary, lower-wage job is better than no job at all.

The rise of temporary labor has contributed to a plunge in German joblessness. The unemployment rate has fallen to just above 7 percent, or 3.2 million people, from nearly 12 percent in 2005, or almost 5 million people.

Temporary employment agencies have soaked up a large proportion of those jobless people, many of whom lack training. The industry draws two-thirds of its new employees from the ranks of the unemployed, according to a study by the German Federal Employment Agency.

Randstad Holding, a global temporary-employment agency based outside Amsterdam, has created 50,000 jobs in Germany over the last two years, said Ben Noteboom, Randstad’s chief executive. Most of the people hired had been jobless, he said.

“In the past, staffing was difficult legally,” Mr. Noteboom said. “The moment it changed, the market started to boom.”

He said that he was baffled by efforts to tighten restrictions on temporary hiring. Abuses by a few companies had turned public opinion against the industry, he said. “In Germany, we do see that there is more aggressive talk against our business,” Mr. Noteboom said. “I don’t know how many difficulties you want to create for your companies to stay in the country.”

In fact, Mr. Noteboom said, Germany still has some of the tightest protections anywhere for temporary workers. He said that he considered “temporary worker” a misnomer in the first place. In Germany, Randstad’s workers have the status of regular employees with full health and pension benefits. They are simply lent to other employers.