Germany has again made clear its opposition to French proposals for jointly-issued bonds from the 17-nation eurozone as a way to create economic growth and ease the region’s financial crisis.
At Saturday’s G-8 summit, German Chancellor Angela Merkel —under urging from US President Barack Obama and French President Francois Hollande — signed up to a statement that called for mixing painful cutbacks with growth-promoting measures to deal with a crisis that threatens the global economy.
The leaders warned that budget deficits have to come down. But they also acknowledged that an approach that’s based mostly on austerity and longer-term reforms can’t help countries out of recessions this year or next. How exactly to encourage growth has become a controversial topic among European leaders, who will meet Wednesday in Brussels to try to find common ground.
Hollande has pushed for issuing debt backed by financially strong countries like Germany to finance growth in weaker countries as one solution. Germany has firmly resisted the idea arguing they would lessen pressure for heavily indebted countries to get their finances in order.