Don't Ask Germany to Fix Euro Area's Growth Lag, Schaeuble Says

  • German finance chief lauds Italy, voices concern on France
  • Monetary policy, deficit spending dismissed as solutions

German Finance Minister Wolfgang Schaeuble praised Italy and criticized France, saying euro-area countries shouldn’t look to Germany, central bankers or deficit spending to boost growth.

“The eurozone problems can only be solved if other member states -- I will not name specific member states -- but some other member states have to increase their competitiveness,” Schaeuble said at a conference on Europe’s future in Berlin on Friday. The euro area needs higher growth rates and “this cannot be changed by Germany.”

While voicing optimism “for the first time” that Italy will solve its economic challenges under Prime Minister Matteo Renzi, Schaeuble said the French government will have to keep pledges to reduce its budget deficit. French politics is complex and pandering to the National Front, which advocates breaking up the currency union, is “overshadowing the French political system.”

Schaeuble’s comments on the euro and his renewed rejection of joint deposit insurance in the 19 member countries as premature reaffirm precepts applied by German Chancellor Angela Merkel during the financial crisis since 2010, including during this year’s talks on the third bailout for Greece.

“Monetary policy can’t replace the decisions you have to take,” said Schaeuble, who spoke in English. “And by the way, you can’t solve the problem by fiscal policy if you only understand fiscal policy as deficit spending.”

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