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UPDATE 1-German finmin says euro at stake in debt crisis
November 23, 2010 / 11:16 AM / 7 years ago

UPDATE 1-German finmin says euro at stake in debt crisis

* Euro falls after Schaeuble says currency on the line

* Germany has become role model for Europe - Fin Min

(Updates with quotes, details)

By Erik Kirschbaum

BERLIN, Nov 23 (Reuters) - German Finance Minister Wolfgang Schaeuble warned on Tuesday that the euro itself was at stake in the currency bloc’s sovereign debt crisis, knocking around a third of a cent off the common currency’s value.

“We’re surrounded by a difficult environment in Europe,” Schaeuble told parliament, referring to a debt crisis that has now engulfed Ireland as well as Greece and threatens to spread further.

”I’d like to make clear that our joint currency is at stake and we have to take over responsibility.

“If we can’t lastingly defend it jointly as a stable currency, the economic and social consequences would be incalculable,” he said. “That’s our responsibility that we have to face in this difficult situation.”

Schaeuble told parliament that Germany itself is not swimming in money but rather drowning in debt even though its fiscal situation has improved slightly this year thanks to strong economic growth.

He said Germany’s austerity drive was a model for Europe and said budget consolidation efforts must continue despite the slightly improved budget deficit situation due to strong economic growth and higher tax revenues.

“Some believe we’re swimming in money,” Schaeuble said in a debate about the 2011 budget. “We’re not swimming in money but rather drowning in debt and we’re trying to defend ourselves.”

News earlier this month that tax revenues were better than expected led to calls for tax cuts from within Chancellor Angela Merkel’s centre-right coalition [ID:nBAT005745] -- especially from the Free Democrat coalition partners [ID:nLDE6A32L2]

MOTOR

Schaeuble said that earlier this year there were doubts about the German push to reduce deficits was the right remedy for the debt crisis. But he said Germany, where the recovery was strong, had been vindicated with its drive to consolidate.

“In the meantime Germany has become a growth motor for Europe and beyond,” he said.

“And that’s why we have a responsibility to show we’re on the right track with solid fiscal policies -- reducing deficits and securing a basis for employment.”

Schaeuble added Germany’s strong recovery had helped give the country’s “social-market economy” a better name around the world. “The social market economy is now seen in a more positive light around the world than a year ago,” he said.

Additional reporting by Sarah Marsh; editing by Patrick Graham

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