FRANKFURT (MNI) – Balanced and sustainable growth requires the
ability to reduce the deficit, Germany’s Finance Minister Wolfgang
Schaeuble said in the Financial Times.
“This is the lesson of the recent crisis,” Schaeuble wrote in an
opinion piece published on Thursday. “This is what financial markets, in
their unambiguous reaction to excessive budget deficits, are telling us
and our partners in Europe and elsewhere.”
The minister answered with an “emphatic no” the question posed by
some as to whether Germany was acting too soon in cutting its public
spending, and thereby hindering growth both domestically and beyond its
borders.
Schaeuble stressed that the deficit cutting strategy Germany plans
to launch next year is “moderate in scale,” with savings measures
amounting to less than 0.5% of GDP.
“This controlled and measured approach to reducing our deficit is
hardly what one would call ‘slamming on the brakes’,” he said. “Indeed,
one of its objectives is to strengthen our growth potential. Our course
could be described as one of ‘expansionary fiscal consolidation’.”
While conceding that governments cutting support measures too soon
would be “dangerous,” the minister warned that policymakers must not
become “addicted” to borrowing in order to boost demand.
“Deficit spending cannot become a permanent state of affairs,”
Schaeuble cautioned. “We need carefully considered exit strategies.”
Schaeuble noted the measures that Germany had taken to cushion the
impact of the crisis on the economy and support domestic demand and
labour markets.
“Some of those who are pointing fingers at Germany today hail from
countries where such built-in mechanisms to tackle economic slowdowns
are much weaker,” the minister said.
— Frankfurt bureau: +49 69 720 142; E-Mail: frankfurt@marketnews.com —
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