Merkel hosts EU jobs summit in bid to blunt austerity fatigue
Chancellor Angela Merkel is hosting European leaders for talks on how to spend 6 billion euros to shrink the region’s jobless rolls and ease the impact of German-led austerity measures on the euro area.
French President Francois Hollande, Italian Prime Minister Enrico Letta and Portuguese Prime Minister Pedro Passos Coelho are among leaders who will join Merkel, the head of Europe’s biggest economy, at the meeting in the chancellery in Berlin on Wednesday. A news conference is set for 5:15 p.m. local time.
“Providing opportunity to those who belong to the common market is the right thing to do in a common European house with a joint currency,” Merkel said on Tuesday during a visit to Trumpf GmbH, a German laser-technology company, in Ditzingen, near Stuttgart. The Berlin conference is about “how we spend” already approved EU jobless aid, she said.
Merkel, who is seeking a third term in German elections on Sept. 22, is blamed across southern Europe for record-high youth unemployment as a result of budget cuts and economic overhauls agreed to by countries such as Greece and Portugal in return for sovereign rescues in the euro-area debt crisis.
Unemployment among people younger than 25 in the euro area rose to 23.9 percent in May, compared with 23 percent a year earlier, amid an 18-month recession that is the region’s longest, according to European Union data released yesterday. Germany had the lowest rate, 7.6 percent, while Greece had the highest, 59.2 percent, follow by Spain at 56.5 percent and Portugal with 42.1 percent.
Merkel aims to “show that Germany isn’t a cold-hearted hegemon that demands austerity and doesn’t care about the jobless,” Jan Techau, head of the Brussels office of the Carnegie Endowment, said by phone. “Youth unemployment can’t be fought by state-created jobs programs. It will be fought by economic dynamism and revamping European economies, which isn’t really happening in many euro nations.”
European leaders agreed at a summit in June to speed up the payout of 6 billion euros set aside for combating youth unemployment in the EU’s 2014-2020 draft budget. At the same time, Merkel resisted pressure by southern Europeans such as Letta to spur project lending by the European Investment Bank.
Rising borrowing costs in Portugal and speculation that Greece may need a second debt cut underscore the risk of a resurgence of the debt crisis that was damped by the European Central Bank’s offer of unlimited bond-buying last September.
Portugal’s bonds slumped, pushing 10-year yields above 8 percent for the first time since November after two Cabinet members, including Finance Minister Vitor Gaspar, quit. Spanish and Italian bonds dropped for a second day.
Merkel rejected speculation that Greece would need another debt writedown to keep its international bailout on track, Sueddeutsche Zeitung quoted her as saying in an interview. “I don’t see that” happening, she said, according to the German newspaper.
European Central Bank Executive Board member Joerg Asmussen said discussion about a debt cut isn’t helpful, Die Welt newspaper reported.
[Reuters]
