BERLIN, Dec 17 - The head of the Ifo economics research institute welcomed Germany's tax and welfare reform deal on Wednesday but said it would not have any noticeable impact on growth rates next year. Ifo President Hans-Werner Sinn disagreed with forecasts from Economy Minister Wolfgang Clement this week that the deal would add as much as 0.6 percentage points to gross domestic product next year. The government and opposition agreed on a package of welfare and labour market reforms on Monday but the opposition rejected plans for a 15.6 billion euro tax cut next year, settling instead for a 7.8 billion euro cut that was subsequently revised to 8.9 billion euros. Sinn told German radio the reduced tax cut package would bring little immediate stimulus to the economy. "It can't possibly be 0.6 percent," he said. "In the old reform as it was announced...it was 0.2 percent. We now have half of that, so it's only 0.1 percent. That's as good as nothing. It won't add anything to economic growth," he said. But he said the overall package, which includes measures to get the long term unemployed back to work, would help underpin long term growth. "It's very good there," he said.
Asked if an upswing in the economy next year would help reduce the ranks of Germany's 4.5 million jobless, he said he expected a small impact on unemployment rates but not enough to bring a major turnaround. "A bit, half a million. Then we wouldn't be at four-and-a-half million but four million or 3.9 if things go very well," he said.//