Mannheim, Germany - Economic-stimulus projects in Germany are to begin with roading upgrades in early spring after decisions in January, German Chancellor Angela Merkel said in a speech Tuesday.

Merkel again rejected calls for tax cuts or handouts to consumers, insisting it was better to accelerate planned investment in German infrastructure to infuse the economy with new money.

"The government will act on this in January," she said in a speech to the Centre for European Economic Research, a think tank in Mannheim, Germany. "It is obvious that one should do everything in the infrastructure field that can be begun quickly."

She called on Germany's 16 states to propose their highway plans to Berlin so that work to build or repair roads with federal grants could start "in the early spring."

Most of the states have a backlog of detailed engineering proposals for projects that have been waiting for federal funding.

"I believe a few billion euros more can be assembled there," said Merkel, who has described 32 billion euros in recent government spending approvals as stimulus to the flagging German economy.

She said she was "no friend" of the idea of handing cash vouchers to Germans to encourage them to spend.

Merkel conceded in the speech that the German banking system was still not functioning normally. She said she was worried there would be a credit crunch in the country which could stifle possible growth.

"Mutual trust within the financial sector is lacking," she said. "That's not something one can blame individual banks for." (dpa)