Wednesday, September 26, 2012

Angela Merkel: Europe must stay the course with painful reform

Angela Merkel issued a blunt warning to Germany's ailing eurozone neighbours yesterday, telling them that pressing ahead with painful reforms and tough budget policies was the only way of resolving Europe's intractable and deepening economic crisis.

The Chancellor made her remarks in a speech to the Federation of German Industries on another day of turmoil in the currency bloc. The Spanish government faced mass anti-austerity protests in Madrid, while Greece was reported to be billions of euro off-track in meeting the terms of its bailout. Meanwhile, the ratings agency Standard and Poor's once again highlighted the grim state of the EU economy, forecasting that the eurozone would not return to growth until at least 2014.

Against such a gloomy backdrop, Ms Merkel insisted: "We need to take a deep breath to overcome this crisis. We must make the efforts that will allow Europe to emerge from the crisis stronger than it went in."

The German leader conceded that hard-won reforms in southern Europe had helped, but said there was still work to do. The markets, she added, had doubts about their ability pay back their debts. Her comments were overshadowed by the continuing crises in Spain and Greece. The government in Athens conceded yesterday that it would need between €13bn to €15bn more in funding if it were given the two-year extension to the bailout plan it has been requesting. Read More