Merkel rejects call for more credit growth | News | DW | 10.05.2012
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Merkel rejects call for more credit growth

German Chancellor Angela Merkel has rejected calls from her center-left opponents for economic stimulus policies that rely on new debt, warning that taking on more credit would just push Europe deeper into crisis.

Angela Merkel made it clear in the German parliament, the Bundestag, on Thursday morning that she was still opposed to the issue of taking out further credit to stimulate the European economy.

"Growth on credit would just push us right back to the beginning of the crisis, and that is why we should not and will not do it," she said in her speech.

Merkel also said that reducing debt and encouraging growth were "twin pillars" of European policy, rather than two alternative approaches.

"There is no golden path or supposed miracle cure," said Merkel, dismissing once again suggestions that Germany might back so-called euro bonds issued jointly by the 17 nations that share the common currency.

Francois Hollande, the French president-elect, has called for such bonds to finance infrastructure projects and thereby stimulate the European economy.

Opposition looking to France

Since the election of Socialist Hollande as French president on Sunday, Merkel has come under pressure to relax the austerity measures that she has prescribed as the remedy for the eurozone debt crisis.

Emboldened by Hollande's victory, Germany's center-left opposition is calling for a "growth pact" for Europe to be added to the German-led fiscal agreement for budgetary discipline. That pact has been signed by 25 European Union countries but has yet to be formally ratified by many parliaments.

The parliamentary leader of the main opposition party, Frank-Walter Steinmeier, accused Merkel's government of "political lethargy" and said the current economic strength of Germany in comparison to other EU nations was only due to the work of former governments.

"Germany and Europe will only get out of this crisis, when we are bold enough to encourage growth," he said to the parliament following Merkel's speech.

al/mz (AP, AFP, Reuters)