Merkel warns of 'difficult choices' in cutting deficits

15th May 2010, Comments 0 comments

German Chancellor Angela Merkel warned on Saturday in a newspaper interview that Germany faced "difficult choices" cutting spending to wrestle down the public deficit.

"Of course there will be difficult choices about how we can save money," Merkel told the Sueddeutsche Zeitung, insisting that cutting deficits and ambitious policies were not incompatible.

Merkel also urged Germany's eurozone partners to "restore order in their public finances" and to make "efforts to improve competitivity" in order to stabilise the euro.

Battered by persisting concerns about the eurozone's spiralling debt crisis, the euro fell on Friday to an 18-month low against the dollar, the lowest point since Lehman Brothers went bankrupt, plunging the world into financial crisis.

"If the euro fails, a lot more will also fail," she said, warning that the collapse of monetary union would "shake the whole European project" to its foundations.

Eurozone countries scrambled last weekend to put together a 750 billion euro plan to keep Greece's debt crisis from spreading to other heavily indebted countries such as Spain and Portugal.

© 2010 AFP

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