More stimulus wrong answer to crisis: Merkel

27th September 2011, Comments 0 comments

German Chancellor Angela Merkel hit back Tuesday at those calling on Europe to introduce new economic stimulus packages to boost demand and spend its way out of the crisis.

"This is the wrong idea," Merkel told a business conference in Berlin, adding that one cannot solve a debt crisis by taking on more debt.

She also insisted that the current crisis in the eurozone was not related to the common currency, but rather to the huge debt piles accumulated by euro area members.

"We don't have a euro crisis, but a debt crisis," said Merkel.

She urged Germans to realise that "Germany is profiting from the euro."

And she reiterated that Greece needed to show the financial markets that it was "on the right path."

Merkel faces a much-anticipated vote on boosting the EU's rescue fund that could well touch off another political crisis in Germany.

While the legislation is certain to pass -- the opposition has vowed to vote in favour -- Merkel faces the humiliation of having to rely on them amid a threatened backbench rebellion.

She said it was "of the utmost importance" that the legislation pass.

© 2011 AFP

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