EUROPE risks becoming little more than an interesting holiday destination if less competitive countries do not follow Germany’s example, Chancellor Angela Merkel told a packed hall in Davos yesterday.
Germany’s premier warned against levelling down in order to make the Eurozone a coherent economic group.
“Do we wish coherence and consistency without ambition?” she demanded, saying that the continent risks embracing “the lowest common denominator” if poorly performing nations did not “follow those role models” with high productivity – like Germany. “We will certainly be an interesting place to take a holiday in but we will not be competitive.”.
During her opening address for the World Economic Forum Merkel also reitered Berlin’s view that Europe must embrace a system of harsh sanctions for countries that do not keep a firm grip on their spending.
“If we break the rules, we’re ready to have others bring legal action against us,” she said.
The issue of what powers the ECJ should have over erring nations has been a key sticking point in negotiations over the Eurozone’s new “fiscal compact”, with Germany supporting the most stringent legal framework.
And she appealed for patience from financial markets for Europe’s slow political negotiations: “Please take the long, drawn-out process with a certain degree of acceptance,” she said.
Berlin is also keen to keep non-Eurozone nations at the table as a counterweight to some less competitive countries in the euro.
Merkel told delegates: “We have to be very careful this common union of the 27 remains a union”. But she added that the euro 17 would need to embrace their own more integrated state: “Do we dare more Europe? We’re ready to be more European,” she said. “There will have to be more integration... we have to become used to the [European] Commission becoming more and more like a government.”
Then, turning to the hundreds of top business leaders watching, she said: “And please don’t forget us when you're thinking of investment.”