The new year will probably be worse than the last, but Germany, Europe’s biggest economy, should be able to withstand it, German Finance Minister Wolfgang Schauble said in an interview Monday.
“2012 will probably be more difficult than 2011, but the German economy is in good shape,» Schauble told the mass-circulation daily Bild.
The minister urged eurozone countries to «do their homework… consolidate their budgets and push through the necessary reforms» to resolve the long-running debt crisis.
The bail-out mechanisms put in place by member states «can only buy time for states to take the necessary measures and win back confidence,» Schauble added.
In a separate interview with the Berlin regional daily Tagesspiegel, the head of Germany’s central bank, Jens Weidmann, also warned Berlin not to ease up on its budget consolidation efforts and called on Germany to set an example for the rest of Europe.
“As an anchor of stability in monetary union, Germany bears a very special responsibility,» said Weidmann, who is a member of the European Central Bank’s governing council.
“Germany must not ease up on its efforts» to achieve a balanced budget, Weidmann insisted.
“The proposed pause in consolidation this year is unconvincing given the growth outlook,» he said.
On the contrary, «Germany should set an example.”
The German budget deficit is estimated to have reached 20 billion euros ($26 billion) in 2011, lower than expected thanks to the last two years of strong economic growth. But it could rise again to 26 billion euros this year.
“One of the lessons learned from the current crisis is that budget consolidation cannot be postponed,» Weidmann said.
The Bundesbank chief said that decisions taken by European leaders in December to anchor budget stability in the European treaties was a «useful contribution» to resolving the debt crisis.
“But the agreements should not just remain on paper. They must be put into effect and by every single member state,» he insisted. [AFP]