The German Social Democratic Party (SPD) may have lost a few more fans after its candidate for chancellor Peer Steinbrueck’s chief economic policy adviser said the introduction of some form of joint European debt liability to resolve the eurozone crisis would be inevitable.
The SPD is the second major party in Germany next to Angela Merkel’s Christian Democrat Party (CDU). On numerous occassions, Merkel’s government has rejected the use of common debt issuance, which would pave the way towards closer fiscal integration with the rest of the eurozone.
Christiane Krajewski, the SPD aide in question, said that jointly issued euro-region debt is possible depending on how its structured, but that pooling sovereign debt into a “legacy-debt redemption fund” would need to happen “sooner or later”.
Merkel is expected to be re-elected on 22 September 2013, but the policy direction she takes could be affected by which parties she’ll be forced to team up with to secure a majority. In the most recent Forsa poll published in today's Stern magazine, the CDU-led bloc held at 41 per cent support while the SPD lost a point to 22 per cent. Merkel's coalition partner the Free Democratic party held on at five per cent while SPD ally the Green Party lost two points to 12 per cent.
Krajewski added that she disagreed with finance minister Wolfgang Schauble’s attempts to suppress debate on a further debt restructuring in Greece on the grounds it could destroy confidence.
I’m not saying that I’m calling for a debt writedown, but I’m of the view that one should start thinking about what happens after 22 September.