A week before the German government is to issue its next economic forecast, Merkel called representatives from key businesses, banks and unions to a meeting in Berlin to try to assess the size of the crisis, and hammer out a course of action to avoid massive layoffs.

The government has already passed two stimulus packages it says are worth 81 billion euros ($104.7 billion), but the coalition is considering additional measures. It has, however, rejected calls from service-industry union ver.di and metal-workers' union IG Metall to finance a third, 100-billion-euro stimulus package.

Economics Minister Karl-Theodor zu Guttenberg said the "overwhelming majority" of participants at the meeting agreed that talk of a third stimulus package "lacks any foundation."

One measure that's already been agreed upon by the coalition partners is an extension of a car scrapping incentive scheme, which has boosted German demand and helped mainstream car manufacturers.

Shrinking economy expected

Economists have predicted that the German economy will shrink by around five percent in 2009; the government has set its own prediction of a 2.25 percent contraction. In the coming week, the government is to issue forecasts for the development of the labor market and economic activity.