Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Merkel Defends Stance on Tightening Budgets of Euro Bloc Nations

Don't Miss Out —
Follow us on:

April 17 (Bloomberg) -- German Chancellor Angela Merkel defended her government’s focus on tightening budgets in Europe, saying that the benefits of reining in spending outweigh the controversy of austerity.

Merkel, after meeting Estonian Prime Minister Andrus Ansip in Berlin today, lauded his country’s debt load of 10 percent of gross domestic product.

“We always talk about austerity -- that’s the new word that’s often used -- but forget that we never talk about the fact that we have to pay back debt” and instead spend more than we take in, Merkel said after being asked to respond to Estonians weary of deficit cuts and eager to boost spending.

“It’s become a matter of course that you can do that, though in the long term it won’t go well, at least I can say that for Germany,” Merkel said.

Merkel stood by Germany’s preference for consolidating budgets in the face of recession and record unemployment in the 17-member euro area. Yesterday, the chancellor said that austerity will require sacrifices in the near term, though the measures will give way to growth.

Standing alongside Ansip, Merkel said that Europe must look to his euro-member Baltic nation “in admiration.” Estonia, which raised its 2014 growth forecast this month to 3.6 percent, implemented budget cuts equal to about 10 percent of GDP to join the euro two years ago even as output plunged by a fifth in the wake of the 2008 collapse.

Merkel struck a similar chord yesterday, telling a conference in Berlin that taking on debt spending “is often made into a type of obligation” to serve growth.

“All of that is false,” the chancellor said yesterday. “It’s not sustainable in the long term.”

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.