LUXEMBOURG: France and Italy will keep pressure on Germany to use government money to revive the eurozone’s stagnating economy but in a sign of inertia, a promised list of projects to create growth will not be ready until December.
European finance ministers take the argument to Luxembourg for two days of talks following last week’s International Monetary Fund meetings in Washington. There, German Finance Minister Wolfgang Schaeuble ruled out “writing cheques” for the eurozone.
One compromise is an infrastructure investment fund of public and private money, although even the first draft of a list of potential projects will not be ready until December, according to a document prepared for the Luxembourg meeting.
The eurozone’s sinking fortunes are raising alarm among global policy makers who fear the bloc is again dragging on the world economy just two years after its last crisis and say the continued strict focus on budget rigour is misplaced. EU officials are nevertheless seeking last-minute changes to the French and Italian budgets for 2015 to reduce their fiscal deficits, sources said — a sign of the difficult balancing act underway in the euro zone. Ministers will also hear from European Union and IMF inspectors on Greece’s plans to exit its financial rescue programme in 2015.
There are signs that a poor run of German data may be softening Chancellor Angela Merkel’s opposition to public spending. Merkel says her government is exploring ways to encourage more investment in German economy, which contracted by 0.2 percent in the second quarter and could weaken further going into 2015. The German government will cut its economic growth forecasts for 2014 and 2015 next week, sources said, while Britain is also concerned about the impact eurozone stagnation is having on its recovery.
Reuters
