Berlin-EU clash is looming over currency union’s fiscal rules
A clash between the major Eurozone economies over the currency union’s fiscal rules is looming, according to one of the leading German politicians in Angela Merkel’s party.
Norbert Barthle told Italian newspaper La Repubblica that Berlin was heading for a confrontation with the social democratic governments of Italy and France over Europe’s fiscal compact.
Barthle is a member of the Bundestag and the parliamentary spokesman on budgetary of the Christian Democrat party, which Chancellor Merkel leads.
The legislator also criticised Italian Prime Minister Matteo Renzi’s calls for less strict budgetary constraints in exchange for efforts at structural reform, noting that the French government had gained a similar reprieve two years ago, without results.
The Bundesbank, Germany’s arm of the European Central Bank (ECB), also released its latest report on the country’s economic situation yesterday.
The institution said that the country’s outlook was “cloudier” than it had previously been.
German GDP figures released that week showed that the previously reliable Eurozone powerhouse had actually contracted by 0.2 per cent between April and June.
The researchers said that growth was currently slower than the bloc’s potential level, and also presented another front on which German policymakers might conflict with authorities in other countries. The Bundesbank paper argued that expansionary monetary policy could slow some unnamed nations’ reform efforts.
The Bundesbank comments add to the ongoing debate over whether the ECB should pursue a quantitative easing (QE) programme.
Jens Weidmann, the head of Germany’s wing of the ECB, has repeatedly expressed scepticism that asset purchases would be worthwhile for the Eurozone.
The region’s consumer price index rose by just 0.4 per cent during the year to July, significantly below the ECB’s two per cent target.
The Eurozone’s GDP growth also stalled entirely between the first and second quarters, raising concerns about the ability of several countries in the region to stabilise their public debt levels.