Chancellor Angela Merkel said Germany won’t divert from its recipe of tighter budgets and economic overhauls in efforts to pull the euro area out of its malaise.
Without mentioning Greece, where EU leaders are struggling to persuade the government to commit to economic reforms, Merkel lauded euro members including Spain and Portugal for carrying out such measures in return for European bailout financing. She called Ireland “the growth engine of Europe.”
“That shows what reforms in combination with solid finances can do,” Merkel said Wednesday in a speech in Berlin. “This government will continue to call for this course of action, even though we’re confronted with sometimes considerable pressure internationally.”
Merkel reaffirmed her government’s playbook before euro-area finance ministers meet this week in the Latvian capital of Riga for last-ditch talks with Greece. Markets rebounded Wednesday after Greece’s anti-austerity finance minister cited progress.
In contrast with Greece, the nations on Merkel’s list of successes “have gone through very tough programs and earned a bit of breathing space,” she told lawmakers and business officials.
Even so, the German leader said the euro-area economy had more work to do amid challenges including excessively low interest rates and deflation threats following a drop in the price of oil.
“I’m firmly convinced that we’re not out of the woods yet,” Merkel said. “The negative effects of very low interest rates and the low oil price run the risk, of course, that reforms aren’t put through as some countries have done.”