Schaeuble Says Germany Will Stay the Course in Difficult Times

Finance Minister Wolfgang Schaeuble said the German government will continue on its path of budget consolidation even as the economic environment for Germany and the euro region has worsened.

Sanctions against Russia are contributing to a deteriorating growth outlook for Europe’s biggest economy, together with weaker growth in emerging economies, Schaeuble told reporters in Luxembourg today after a meeting of European Union finance ministers.

“We’re agreed in the German federal government that we must stay the course even in difficult times,” Schaeuble said. “We’re doing more for investments, that’s clear.”

Europe’s biggest economy cut its growth forecast today to 1.2 percent this year and 1.3 percent in 2015. This suggests that Schaeuble’s plan to balance the budget next year may be in doubt. Chancellor Angela Merkel snubbed calls earlier this month from euro-area partners and the International Monetary Fund to spend more to stave off weakening growth.

Schaeuble warned against “self-fulfilling prophecies” in assessing the outlook for Germany’s economy and said the government predicts that the growth dip this year will be temporary even as the number of long-term unemployed is seen rising.

“I assume that we can stick to our budget plan,” Schaeuble said. “We’re agreed that if the times are getting more difficult, the priority has to be shifted to investments.”

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