Volkswagen scandal a 'heavy blow' for German economy, European Parliament head says

The head of the EuropeanParliament told a group of German regional newspapers that theemissions scandal at Volkswagen would hit theGerman economy hard, but Europe's biggest carmaker was likely tosurvive the crisis.

Germany's finance and economy ministers have played down therisk of a broader economic danger for Germany from the scandal.

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"It's a heavy blow for the German economy as a whole," MartinSchulz, a German Social Democrat, was quoted as saying by thenewspapers.

"It's hard to believe what was done there negligently andpossibly even with criminal energy. But I believe that
Volkswagen is a strong company that has every chance ofsurviving the crisis," he said.

VW has set aside 6.5 billioneuros($9.6billion Cdn) to helpcover the cost of the scandal, but some analysts think the finalbill could be much higher. VW has said it will have to refit upto 11 million cars and vans containing illegal software.

The car industry is crucial for Germany, Europe's largesteconomy, where the likes of BMW, Daimler and Volkswagen employmore than 750,000 people.

German newspaper Welt amSonntagcited Hans DieterPoetsch,Volkswagen's incoming chairman, as saying the scandal is a threatto the firm's viability albeit a surmountable one.