Germany's centre-right coalition has chosen a bold economic recovery strategy starting with unfunded tax cuts that amount to a third stimulus programme and should be welcomed around Europe and in Washington.

Many European governments had feared Berlin would withdraw its fiscal stimulus too soon, while the United States has been pressing for a rebalancing of the world economy in which surplus countries such as Germany would stimulate domestic demand.

Chancellor Angela Merkel's gamble on growth goes against a tradition of austerity and has drawn instant censure in the domestic media. The magazine Der Spiegel's cover showed a road sign with a German eagle sliding off a slippery road and a warning of an adventurous false start.

But Merkel deserves plaudits for resisting pressure to slash spending or raise taxes before a sustainable upswing takes hold. Germany has been one of the hardest hit major economies in the global recession due to its dependency on exports, but it could now become an engine of European growth.

One concern is that raising the deficit of Europe's biggest economy is bound to loosen budget discipline in other euro area countries and make it harder for the European Central Bank to keep interest rates low to ease the recovery.

There is certainly audible relief in Paris, where President Nicolas Sarkozy has also chosen to put growth ahead of deficit-cutting in a 2010 budget with a record shortfall of 8.4 percent of GDP. Adding to the debt mountain, Sarkozy plans a big public savings bond to fund growth-related research and industrial projects.

Now the European Commission, guardian of the EU's widely abused deficit limits, will no longer be able to contrast French fiscal incontinence with German discipline.

Typically, the French recovery plan will be steered by the state, which will set the investment priorities, while the German stimulus will depend mostly on how consumers and companies use the extra money in their pockets next year.

There is always the risk that they will be more cautious than their government and save rather than spend. But that is a risk worth taking given estimates of pent-up demand in Germany.

Merkel's coalition has given little indication of how the planned additional 24 billion euros in tax cuts from 2011 will be funded under a constitutional amendment that forces Berlin to reduce borrowing sharply every year from that year.

But Germany has shown in the past it is capable of restoring fiscal order with broad public support. The same cannot be said for France, which can no longer rely on devaluation or inflation to whittle away its debt.

Germany