Merkel Defends EU Budget as Steinbrueck Bemoans Cameron Alliance

German Chancellor Angela Merkel defended her decision to back a cut in the European Union budget against opposition charges she had sided with U.K. Prime Minister David Cameron in a Euro-skeptic threat to the bloc.

Peer Steinbrueck, Merkel’s Social Democratic challenger in Sept. 22 elections, accused the chancellor of lacking vision when she agreed at a Brussels summit earlier this month to cut spending in the EU’s seven-year budget for the first time.

“You have joined in an unholy budget-cut alliance with of all people a head of government who possibly wants to leave the EU,” Steinbrueck told lower-house lawmakers in Berlin today, in a reference to Cameron’s announcement of an in-out referendum on Britain’s EU membership. “Mrs. Merkel, the one who wants more Europe in the future, needs partners that also see their future in Europe.”

EU leaders emerged from 25 1/2 hours of negotiations on Feb. 8 with a deal setting the budget for 2014-2020 at 960 billion euros ($1.3 trillion), down from the 994 billion euros spent in the current budget cycle.

Merkel acknowledged that tough negotiations lie ahead to persuade the European Parliament to back the plan, saying that the belt-tightening is justified at a time when some member states are undergoing times of crisis. The EU budget will focus resources on bolstering economic growth, raising competitiveness and tackling youth unemployment in crisis-battered countries, Merkel said in her speech to the lower house, the Bundestag.

With “massive consolidation measures” being carried out in some member states, “we couldn’t have explained to Europe, neither the countries in crisis nor the ones shouldering solidarity, that all have to cut spending apart from Europe itself,” Merkel said. “Now we have to convince the European Parliament.”

Before it's here, it's on the Bloomberg Terminal.