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Germany's Merkel: 2011 Will Also Be Marked By Crisis

BERLIN -(Dow Jones)- The year 2011 will be strongly marked by the financial and economic crisis, and fiscal policy will be "incredibly difficult" for the new government, Germany's Chancellor Angela Merkel said Monday.

Merkel was speaking to her Christian Democratic Union party, lobbying for backing of the coalition program with the Bavarian Christian Social Union sister party and the pro-business Free Democratic Party agreed to Saturday.

She also defended the center-right coalition's program of cutting taxes despite high debt.

This is no guarantee for Germany to get out of the crisis, but it offers the chance to do so while spending cuts wouldn't help, Merkel said.

"We know that unemployment will rise, therefore we must boost domestic demand, " Merkel said.

-By Andrea Thomas, Dow Jones Newswires; 49-30-288-8410; andrea.thomas@ dowjones.com

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