Germany feels eurozone pressure to boost spending

September 15, 2019


Germany faced renewed pressure Friday to boost public spending and help revive a sputtering European economy, a day after the European Central Bank warned it had reached the limit of its powers to avert recession.

The economy in Europe is in slowdown, tripped up by the U.S.-China trade war and rising fears of a chaotic Brexit that have especially harmed export-powerhouse Germany.

To stave off a downturn, the ECB on Thursday cut its already negative interest rates and relaunched a round of bond-buying stimulus, but bank head Mario Draghi urged governments to do more to spark the economy.

The message was especially intended for fiscally cautious Germany, and in a rare singling out of the eurozone’s most powerful member, the head of the Eurogroup of eurozone finance ministers also took Berlin to task.

“My message is quite clear: countries with fiscal space should use it to counter the slowdown of the economy,” said Mario Centeno, who is also Portuguese finance minister, in response to a question on Germany.

“And this must be done, not for reason of solidarity with the others but first and foremost for their own sake,” added Centeno who is usually very cautious in his treatment of Berlin.

Centeno spoke just days after the German government yet again unveiled a zero-deficit budget that flew in the face of the wide-ranging calls for more spending, including by the IMF, top economists and the European Commission.

France has voiced the loudest calls that Berlin abandon low spending, a point Finance Minister Bruno Le Maire repeated on Friday.

“We should not be satisfied with the level of growth within the eurozone,” Le Maire said as he arrived for talks with his EU counterparts in Helsinki. (..)