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Friday, Oct 10, 2014

World

German minister says 'writing checks' won't fix Europe

Reuters | Friday, Oct 10, 2014

WASHINGTON - German Finance Minister Wolfgang Schaeuble said on Thursday more government spending was a wrong cure for the euro zone's weak growth and dismissed the prospect of recession for Europe's biggest economy.

"We don't have a recession in Germany, we have a weakening of growth," he said at a Bertelsmann Foundation event on the sidelines of World Bank and International Monetary Fund meetings.

Schaeuble said "writing checks" was no way for the euro zone to boost growth, and he urged France and Italy to do more in the way of economic reforms.

"As soon as France and Italy implement substantial structural reforms, the situation in Europe will change," he said. "We Europeans have to become stronger, we have to deliver more growth, I agree 100 per cent, but it is not to be achieved by writing checks."

German exports plunged in August by their largest amount since the height of the financial crisis, a report earlier on Thursday showed. The gloomy news came on top of other data this week showing steep declines in industrial orders and output.

The IMF on Tuesday cut its global economic growth projections for the third time this year, to 3.3 per cent in 2014 and 3.8 per cent in 2015, warning of weaker performances in core euro zone countries, Japan and big emerging markets like Brazil.

The Fund has warned that the euro zone in particular risks sinking into a morass of low growth as it grapples with high unemployment and low inflation.

IMF Managing Director Christine Lagarde said on Thursday that Germany and the United States have space to invest more in growth-enhancing infrastructure projects.

Berlin, however, has consistently resisted pressure from its euro zone and global partners to boost spending, rejecting any policy measures that would raise its public debt levels.

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