A Daily news digest by Jasper van Santen

German Chancellor Angela Merkel defends austerity in face of open rebellion in Europe – Telegraph

In Economy, News, Politics on April 24, 2012 at 18:48

Angela Merkel, EU flag

German Chancellor Angela Merkel defends austerity in face of open rebellion in Europe

Note that she is proposing only  cuts in spending…. NOT cuts in taxes. 

In a rare concession, the German Chancellor admitted that austerity alone would not solve the crisis but she insisted that the wave of political opposition to fiscal discipline was wrong.

“We’re not saying that saving solves all problems,” Ms Merkel said at a conference in Berlin. “[But] you can’t spend more than you take in. You can’t live your whole life this way. Everybody knows this.”

European markets regained some of their losses from Monday’s rout after the Netherlands and Spain held successful bond auctions. Spain’s Ibex rose 2.24pc, Italy’s MIB was up 2.48pc, the French CAC jumped 2.29pc and the DAX climbed 1.03pc. In London the FTSE 100 rose 0.78pc.

Mark Rutte, the deposed Dutch prime minister, made a passionate plea to politicians to stick to his proposed budget cuts. “The problems are serious, the economy is stalling, employment is under pressure and government debt is growing faster than the Netherlands can afford,” he said. “Those are the facts and nobody can run away from them. I’m standing here without pretences, it is up to parliament and the voters.”

Mr Rutte said the Netherlands had to confirm its budget intentions in a letter to the European Commission by April 30. The Dutch far-right leader Geert Wilders said the cuts were unnecessary and would be bad for the Netherlands.

The message was repeated in Spain. Treasury minister Cristobal Montoro told parliament: “We are in an extremely delicate moment as a country, an extremely fragile moment as a country […] This is the most austere budget since democracy, and it is aimed at being the most realistic that Spain needs to overcome this crisis situation.”

Meanwhile, George Provopoulos, head of the Bank of Greece, said the country must stick to its spending cuts, regardless of the outcome of elections on May 6, or risk being forced out of the eurozone. He said: “If following the election, doubts emerge about the new government and society’s will to implement the programme, the current favourable prospects will reverse.”

But the president of Germany’s influential Ifo economics institute said Greece should quit the euro. Speaking in New York Hans Werner Sinn said: “I personally believe there’s no chance for Greece to become competitive [while] in the eurozone.”


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