German Chancellor Angela Merkel said she’ll tell her Group of Eight counterparts there is no “magic potion” to cure Europe’s financial crisis and the turmoil can only be overcome by reducing debt and boosting competitiveness.
“Overcoming the sovereign debt crisis cannot and will not happen overnight -- and certainly not with the big bang that we’d all wish for,” Merkel told lawmakers in Berlin today in a speech previewing the G-8 summit at Camp David in Maryland on May 18-19. “There’s been so much discussion about euro bonds and leveraging effects -- all of these remedies came and went like wonder weapons that revealed themselves as unworkable.”
Merkel’s support for austerity measures has come under renewed criticism with a surge of support in Greece for anti-bailout parties and Francois Hollande’s victory in France’s presidential election after campaigning on a platform of shifting the crisis-fighting focus to growth.
In her 20-minute speech to the lower house of parliament, or Bundestag, Merkel reiterated her preference to curtail spending among the 17 euro states and spur growth through “structural reform” rather than debt-funded stimulus programs.
Defeating the euro-area crisis that surfaced in Greece in late 2009 will be a “long and strenuous path,” Merkel said. She identified the source of the crisis as “the horrendous debt as well as the lack of competitiveness in some euro-area countries.”