Thursday, May 10, 2012

Germany remains opposed to calls for economic stimulus in Europe

BERLIN — French President-elect Francois Hollande and German Chancellor Angela Merkel have each been prescribing the same salve — growth — to ease Europe’s economic ills. But the medicines vary sharply on either side of the Rhine.

And though European leaders will meet later this month to try to work out their differences, the 17 countries that share the euro currency remain far from abandoning the debt-funding spending cuts that Germany has long championed.

Hollande’s version of growth involves spending more money to stimulate jobs and economic recovery. Merkel’s version remains focused on slow-moving economic measures, such as making it easier to hire and fire workers, that increase short-term pain before yielding long-term benefits.

As opponents of austerity won elections in both France and Greece this weekend, some analysts and government officials, including some at the International Monetary Fund, have suggested giving governments more time to reduce their deficits, thus taking some of the bite out of steep budget cuts. Read More