Under pressure from the CSU section of her centre right party – Angela Merkel has agreed to include tax cuts in a €50bn stimulus package for Germany.  The Times has more:

"The idea seems to be to announce a package just before Barack Obama’s presidential inauguration on January 20. The combination of US and German initiatives could help to restore international business confidence. The Christian Social Union, the Bavarian sister party of Ms Merkel’s Christian Democrats, has been insisting that tax cuts form part of the recovery plan. The Chancellor had been set against this – part of her contempt for the British measures is the conviction that VAT cuts do not encourage consumer spending – but buckled during talks on Sunday night."

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