Mifrifi to the Rescue

In a special session of the Bundestag, German lawmakers last week nodded their approval of Mifrifi,* a pro gram of stern tax measures and lower government spending designed to elim inate a $16 billion budget deficit for 1968-71. Paradoxically, they also approved an extraordinary budget for a $1.3 billion public-works program. Both moves were part of an effort to boost the German economy from the recession that began last fall.

Some Deputies, though, were grum bling that Mifrifi is an overdose of a very disagreeable medicine. They see hopeful signs that the worst of the recession may be over. The German stock market, dormant since the late 1950s, is thriving. In July and August, stock prices went up an average 19.8%. Un employment, probably the most sensitive problem for Germans since the Wirtschaftswunder all but erased it, dropped almost 5% in August, to 1.7% of the labor force, still an uneasy fig ure compared with the 1% of August 1966, but way down from a peak of 3.1% last February.

In the key automobile industry, where production dropped by 24% in the first seven months of 1967, expectations are general for an upturn in the fourth quarter. Volkswagen, which took the hardest beating, went back to full shifts in mid-August and now has a six-day working week. Companies returned from Berlin's recent radio and TV fair with full order books. Production of color TV sets is sold out till year's end. Inventories in industry as a whole have been running short, with an increasing number of companies about to start replenishing them.

While all this led to complaints that Mifrifi and the pump-priming program are no longer necessary, official soothsayers at Bonn's Economic Ministry believe that the upsurge of confidence in the business community is in anticipation of the $1.3 billion injection. The program is essential, says top Economic Planner Dr. Otto Schlect, "to assure a lasting revival of business."

* Short for Mittelfristige Finanzplanung, which means middle-term finance planning.

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