Berlin - Chancellor Angela Merkel is working on a new stimulus package for the German economy, a business magazine reported Saturday, a day before she hosts talks with industrialists and financial experts on economic strategy.

The weekly Wirtschaftswoche said the new package would be at least 30 billion euros (42 billion dollars), slightly less than the programme of tax relief and construction incentives already in place.

Merkel planned to unveil the measures after US president-elect Barack Obama takes office in January, the report said, quoting sources in the government and the chancellor's conservative Christian Democrats.

Elements of the package include income tax reductions, cuts to mandatory health insurance contributions, infrastructure investments and tax vouchers for the less well-off, the report said.

The income tax reductions will be achieved through the removal of so-called cold progression - a process by which taxpayers are pushed into higher income brackets, even if their real income has not grown. This happens when tax bands are not automatically adjusted for inflation.

Merkel has been under pressure to introduce new measures to help Germany dig its way out of a recession that is expected to see Europe's largest economy shrink by 0.8 per cent next year.

A survey conducted Friday for national broadcaster ARD showed four out of five Germans supported tax cuts. Some 75 per cent felt the economy was in bad shape, but nearly two-thirds described their own financial situation as good.

On Sunday, the chancellor has summoned four of her key cabinet ministers and two dozen business leaders, bankers, economists and trade union officials to her office for discussions on the economic crisis.

Government officials have sought to play down expectations from the talks, saying they were intended to form a consensus on how the economy might develop in the coming year.

At the most there could be a "minimal agreement" on which measures might best be suited to prime the economy and which might not be, deputy government spokesman Thomas Steg said on Friday.

On the government side Merkel, Vice Chancellor Frank-Walter Steinmeier, Finance Minister Peer Steinbrueck, Economics Minister Michael Glos and Labour Minister Olaf Scholz will be in attendance.

Central Bank president Axel Weber, Deutsche Bank chief executive Josef Ackermann and Deutsche Telekom chief Rene Obermann are also expected to be present.

One of the issues to be discussed is the 480 billion-euro bailout fund introduced in October to prop up the banking sector.

So far 15 banks have applied for state aid to ease their liquidity problems, but the government wants more of them to do so and begin easing credit restrictions for small- and medium-sized firms. (dpa)