Schaeuble Seeks to Explain Europe as Lew Urges More DemandRainer Buergin and Ian Katz
German Finance Minister Wolfgang Schaeuble sought to “explain” Europe to Jacob J. Lew, as the new U.S. Treasury Secretary prodded Germany to spur consumer demand.
Lew, in his first visit to Berlin since taking office Feb. 28, said that the U.S. and Germany shared the same stance on a commitment to economic growth and to “fiscal discipline,” while stressing at a joint press conference with Schaeuble today that the U.S. seeks to balance the two to maintain the recovery.
“We need to balance policies of growth and investment in the future with policies of fiscal consolidation,” Lew said when asked what measures he would like to see implemented to help the U.S. economy. “The driver for economic growth will be consumer demand, and policies that help to encourage consumer demand in countries that have the capacity would be helpful.”
An emerging recovery in the U.S. coupled with a global effort to jump-start growth through monetary measures may be weighed down by recession in the euro area, where unemployment has reached a record 12 percent. U.S. officials including Lew’s predecessor, Timothy Geithner, have criticized the German-led focus on scaling back public budgets to restore market confidence damaged by the euro-area crisis that began in Greece.
“I have tried to somewhat explain the complicated structures in Europe because we’re on a good track in Europe but have difficult structures and decision-making processes,” Schaeuble told reporters. “Nobody, also in Europe, sees this contradiction between finance policy consolidation and growth. We have the common position of a growth-friendly consolidation, or sustainable growth, whatever you want to call it.”
Lew, who met with European Union officials in Brussels yesterday and traveled from Berlin to Paris to meet with French Finance Minister Pierre Moscovici, is not prescribing fixes to the region’s leaders, a Treasury official said.
While unemployment rates in the euro periphery countries are unsustainable, euro-area leaders are becoming more pragmatic, the official told reporters accompanying Lew on condition of not being further identified.
In Berlin, the Treasury Secretary reiterated that the U.S. has “an immense stake in a strong and prosperous Europe.”
“With that in mind, Minister Schaeuble and I discussed our common interest in strengthening global growth, advancing the agenda for international regulatory reform and creating additional opportunities for increased trade, investment and job creation,” Lew said.
For all “the usual papering over of differences” between Lew and Schaeuble, “Washington and Berlin remain at odds over measures to revive the global economy,” Nicholas Spiro of Spiro Sovereign Strategy in London said in an e-mail. “Just as the Obama administration believes Germany can afford to reflate its economy somewhat to spur growth in the eurozone, Berlin believes there is no contradiction whatsoever between austerity and growth.”