Germany's Schaeuble fends off pressure to spend more

[Washington] German Finance Minister Wolfgang Schaeuble on Thursday denied Germany was falling into recession and stuck to his opposition to higher spending to revive the eurozone economy.

More growth will not be "achieved by writing checks," he said at an event on the sidelines of World Bank and International Monetary Fund meetings in Washington.

Mr Schaeuble instead called on Italy and France to implement "essential structural reforms" and cautioned against a further loosening of monetary policy by the European Central Bank.

He warned of "moral hazard" if some countries were to use easy money to delay necessary reforms.

"You can't always spend other people's money in a monetary union," he said at the event hosted by the Bertelsmann Foundation think tank.

Germany, Europe's largest economy, has come under pressure from the IMF and other quarters to increase spending to help prevent the eurozone from stagnating.

Germany "could afford to finance much-needed public investment in infrastructure primarily for maintenance and modernization, without violating fiscal rules," the IMF wrote in its new World Economic Outlook this week.

Against the backdrop of a gloomy German growth forecast, Mr Schaeuble also dismissed fears that Germany was headed for a recession.

"We don't have a recession in Germany. We have a weakening of growth," he said, blaming geopolitical risks in Ukraine and the Middle East as well as the impact of the eurozone woes on Germany's export-oriented economy.

"We are the engine of growth in the eurozone," Mr Schaeuble added.

But he acknowleged that "we have to give more priority to investment."

- AFP