–Updating Story Published 10:16 ET, Adding Material
By Chris Cermak
WASHINGTON (MNI) – German finance officials on Friday rejected
calls for Europe’s largest economy to undertake more stimulus measures
as a means of propping up growth in the Eurozone.
Bundesbank President Jens Weidmann said he believed a new German
stimulus program would have little effect on growth in the flagging
euro area and could lead to “problematic side effects” by further
undermining market confidence in the ability of Europe to reduce its
fiscal deficits.
Germany’s Finance Minister Wolfgang Schaeuble said that G20 finance
ministers and central bank governors had agreed at a dinner in
Washington Thursday night that their goal should continue to be fiscal
consolidation.
“There is wide consensus that we of course have to hold onto the
path of deficit reduction,” Schaeuble told reporters in Washington,
adding that Germany would stick to its G20 commitment to halve its
budget deficit by mid-2013.
If the crisis stems from a lack of market confidence in Europe’s
handling of budget deficits, “then it is completely clear that the
crisis cannot be fought by making the [problem] larger,” he said.
Schaeuble said that quick approval by Eurozone governments of the
July 21 agreement to expand the European Financial Stability Facility
was key to restoring confidence. He said he expected the national
parliaments of Eurozone member states to have passed the measure by the
time G20 finance ministers meet in France in the second week of October.
Both officials insisted that key to the European crisis was
restoring market confidence, noting that the International Monetary Fund
backed their call for broad fiscal consolidation among governments in
the currency bloc.
The United States has been pushing for stronger European nations to
consider more spending measures as both sides of the Atlantic are facing
the threat of a renewed recession. But with automatic stabilizers
already in place in Europe, Weidmann said a fresh stimulus package in
the U.S. did not mean one was equally necessary for Europe.
Weidmann said it was critical that Germany meet its own budget
targets: “Being dependable also means following through on existing
commitments.”
— Chris Cermak is a Washington, D.C. reporter for Need to Know News
** Market News International Washington Bureau: 202-371-2121 **
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