German Finance Minister Wolfgang Schaeuble on Tuesday said it was wrong to believe that loosening Europe’s tough budget rules would help to boost economic growth and jobs in the region.
“Over the past few years, we’ve proven again and again that a solid fiscal policy is the best policy for growth and jobs,” Schaeuble told Germany’s parliament, as Berlin attempts to head off pressure from its eurozone partners to ease the region’s fiscal targets.
Schaeuble was presenting to the Bundestag Germany’s first balanced budget since 1969, which he said should become the norm from next year onwards. The 2015 budget follows a forecast deficit of 6.5 billion euros (8.4 billion dollars) for this year.
Italy and France have been spearheading a drive in Europe to promote economic growth by relaxing the strict budget rules and fiscal austerity championed by Germany.
But Schaeuble told parliament: “Everyone must stick to the rules, which we’ve drawn up together.”
He said a solid, reliable and stability-oriented fiscal policy was needed as the eurozone faced up to a period of weak economic growth and the threat posed by global tensions such as the crises in eastern Ukraine and the Middle East.
“Anything else would lead to a new crisis of confidence. And that would be the last thing that we need in Europe,” Schaeuble said.
He also told the Bundestag that Germany and France were planning joint action to help to promote liquidity in the eurozone by overcoming the bottlenecks in bank lending, which economists see as a drag on the region’s economic growth and investment.
It includes proposals to revive the loan securitization market and boost investment, which Schaeuble and French Finance Minister Michel Sapin are to present to EU finance ministers at a meeting at the end of the week in Milan.
The comments follow the announcement last week by the European Central Bank of a series of fresh monetary stimulus measures, including new asset-backed schemes aimed at boosting liquidity in the struggling eurozone economy.
GNA
