The lady's not for turning: Merkel slaps down Greece and Hollande and says there is no alternative to austerity

  • Angela Merkel under pressure after election of Socialist French president
  • German Chancellor insisted strict measures were the only way
  • Critics accuse her government of 'political lethargy'

By Emma Reynolds

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Strict policies: Angela Merkel warned that increasing credit would only throw Europe further into crisis

Strict policies: Angela Merkel warned that increasing credit would only throw Europe further into crisis

Angela Merkel has rejected calls for an alternative to austerity, warning that increasing credit would only throw Europe further into crisis.

Since the election of Socialist Francois Hollande as French president on Sunday, the German Chancellor has come under pressure to relax her strict debt reduction policies.

But Mrs Merkel, leader of Europe's biggest economy, said deficit-cutting measures being demanded from countries like Greece in return for bailouts were vital to ensure a return to sustainable growth.

Germany's centre-right leader told the Bundestag (lower house of parliament) that reducing debt and encouraging growth were 'twin pillars' of European policy, rather than alternative paths.           

'Growth on credit would just push us right back to the beginning of the crisis, and that is why we should not and will not do it,' said Mrs Merkel, who is expected to be visited by Mr Hollande next week on his first foreign trip as president.    

Emboldened by Mr Hollande's victory, Germany's centre-left opposition is calling for a 'growth pact' for Europe to be added to the German-led fiscal pact for budgetary discipline.

 

The original pact has been signed by 25 European Union countries but has yet to be ratified by many parliaments.          

Speaking after Merkel, Frank-Walter Steinmeier, parliamentary leader of the rival Social Democrats (SPD), accused the government of 'political lethargy' and said Germany had weathered the euro crisis well because previous governments had introduced 'a blend' of austerity and growth policies. 

Firm: The Chancellor told the Bundestag (parliament) in Berlin that getting over the crisis would be a 'long, strenuous process'

Firm: The Chancellor told the Bundestag (parliament) in Berlin that getting over the crisis would be a 'long, strenuous process'

Greece's financial difficulties


But Mrs Merkel insisted: 'The only sustainable path is to accept that getting over the crisis is a long, strenuous process which will only succeed if we tackle the causes of the crisis - which are the horrendous debt and the lack of competitiveness of some euro zone states.'   

Mr Hollande threatened early in his campaign to seek a complete renegotiation of Mrs Merkel's 'fiscal compact' to secure the inclusion of measures to promote growth and employment.

Socialist: Francois Hollande's election as French president has increased pressure on the German Chancellor to relax her painful measures

Socialist: Francois Hollande's election as French president has increased pressure on the German Chancellor to relax her painful measures

He later toned this down, offering more modest proposals such as extra financing for the European Investment Bank, European 'project bonds' to fund infrastructure programmes, a financial transactions tax and better use of EU structural funds.  

German officials say Mrs Merkel is not fundamentally opposed to any of these ideas, though she has her doubts about the project bonds if they involve raising any new debt.            

The talks between German Chancellor and the new French president will be watched closely to see if they look likely to be able to compromise.

This could be vital to ensure continued co-operation between the eurozone's two biggest powers, as achieved with Mr Hollande's conservative predecessor, Nicolas Sarkozy.            

Mrs Merkel will meet Mr Hollande just after a strategically-important domestic vote in North Rhine-Westphalia, where her Christian Democrats (CDU) look set to lose to the incumbent SPD and their Green allies.     

In a heavily-indebted state, the election is being seen as a referendum on Mrs Merkel's austerity versus the SPD's message of the need for a greater focus on growth and job-creation.   

'Voters have an opportunity to decide whether we continue to wade through this quagmire of public debt under the SPD and Greens or get out of debt with the CDU and head for innovative growth,' said Peter Hintze, a senior CDU politician from NRW.            

The Ifo economics institute in Munich voiced the concerns of many Merkel voters when it said in a research note that some EU countries wanted German taxpayers to finance their growth: 'It is time for the euro periphery countries to start growing using their own savings.'

 

The comments below have not been moderated.

Never mention der war! !

Click to rate     Rating   3

She's right! The other way is certain trouble as much as I hate to say it. The same goes for the UK.

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The problem is so many politicians will still not stand up and tell the truth. And the truth is we are all bust, the family silver spent on a ten year credit binge. Hard to take, I know, but there is only one way. Live within your means and spend at least a decade building a properly balanced economy. That's true on the Continent and its true in the UK. Please don't believe Ed Balls. He was one of the idiots that caused Europe to go down the pan

Click to rate     Rating   12

++"Frau Merkel - Lieber ein ende mit schrecken als ein schrecken ohne ende!" - Garry Knight, Rethel France, 11/5/2012 14:25++++++++++++++++++++++++++++ Indeed- and the sooner that end comes, the better for us all!

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Hollande will quickly find out that Germany runs the eurozone economy and when Merkel shouts he'll be asking how high. It'll be interesting to see if he's the normal type of politician who promises much but delivers little and blames everyone exept himself for his shortcomings.

Click to rate     Rating   15

You all will do what the Gruppen Fuhrer Merkel tells you to do never mind the other 26 Countries in the EU they are just pawns the the great plan of Germany to control Europe.

Click to rate     Rating   3

Are my eyes deceiving me? DM readers praising Angie and the Germans! Are all the UKippies down the pub? - John S, Bromley, 11/5/2012 0:41.....Nope John, just reading Marine Le Pen's Manifesto, who will be in charge next time, when it goes belly up for Francois... ................Ps: love it when a plan comes together

Click to rate     Rating   10

Greece and Hollande should sit up and listen when Ms Whiplash starts strutting her stuff

Click to rate     Rating   6

Frau Merkel - Lieber ein ende mit schrecken als ein schrecken ohne ende!

Click to rate     Rating   1

Those who hold the purse strings call the rules. That is the way of reality, folks. It isn't Germany "telling" everyone else what to do, it is Germany saying "no more free money". They have that right, it is their money. They can do what they want with it. If you had a friend who borrowed and borrowed from credit cards, living better than you do, buying cars and vacations, then the credit cards came due...would you just hand money over with no conditions?? Would you say "Sure, honey, just take my money and keep spending like you have been..no problem!"??? Think, people, think.

Click to rate     Rating   19

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