Brussels approves extension of German research funding

Feb 13, 2009, 12:19 GMT

Brussels - The European Union's executive on Friday approved a German plan to fight recession by providing an additional 900 million euros (1.2 billion dollars) in state support to medium-sized companies trying to fund research and development.

The latest German plan, which targets companies which employ up to 1,000 staff until the end of 2010, is in line with EU rules because it is limited in time and scale and is aimed at boosting innovation, the European Commission said in a statement.

The move is part of wider German efforts to support businesses invest in new technology at a time in which they are finding it difficult to access credit due to the global financial crisis.

'In the current crisis smaller players have less access to financing, as the financial market is extremely risk averse,' said EU Competition Commissioner Neelie Kroes.

The German government had already approved research and development aid totalling 1.5 billion euros for small companies, but decided to extend it to cover larger businesses as part of an overall bid to stimulate economic growth.

On Friday, figures showed that Germany's economy had shrank by 2.1 per cent in the final quarter of 2008, the largest quarterly drop since German unification in 1990.

The European Commission expects German gross domestic product to fall by at least 2.3 per cent in 2009.