Germany's Merkel not to blame for austerity: EU's Barroso

BERLIN Sun May 5, 2013 12:09pm EDT

European Commission President Jose Manuel Barroso addresses the European Parliament during a debate in Strasbourg, April 16, 2013. REUTERS/Vincent Kessler

European Commission President Jose Manuel Barroso addresses the European Parliament during a debate in Strasbourg, April 16, 2013.

Credit: Reuters/Vincent Kessler

BERLIN (Reuters) - German Chancellor Angela Merkel is not to blame for the austerity policies being imposed elsewhere, the head of the European Commission was quoted on Sunday as saying, in an apparent attempt to mend fences with Berlin.

European Commission President Jose Manuel Barroso drew fire from Germany last month for saying that austerity had "reached its limits", in a public challenge to Europe's biggest economy, which has long championed fiscal restraint.

With Greece mired in recession, unemployment in some countries running at more than 25 percent, and France being given more time to cut its budget deficit, there is growing pressure on Merkel and other hardliners to focus on growth and job creation, not on austerity.

But Barroso defended the policies of austerity and said growth built on debt was not sustainable, while reiterating his view that "pure austerity" measures were no longer acceptable.

"What is happening in France and Portugal is not Merkel's or Germany's fault," Barroso told the Welt am Sonntag weekly paper.

"Growth that is based on debt is not sustainable. At the same time, the policies that people see as pure austerity have reached their limits of political and social acceptance.

"But the EU Commission says: the current policy mix is right and we must continue it."

Barroso also said Germany should not become complacent in its reform efforts just because its economy was performing better than others, adding that the country needed to open its markets for services and infrastructure.

"Complacency would be dangerous for Germany. We should not forget how tightly interlinked the European economy is. And Germany benefits most from the European internal market and from a stable euro," Barroso told the paper.

"In certain sectors Germany should open its market more than before. We will say more on this in our country-specific recommendations at the end of the May."

Germany has fared better than others in the euro zone debt crisis that began in late 2009, but its economy shrank at the end of last year, and the government now sees economic growth this year of just 0.5 percent.

(Reporting by Annika Breidthardt; Editing by Hugh Lawson)

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