Germany no model of fiscal discipline: Juncker

8th December 2011, Comments 0 comments

The head of the eurozone finance ministers, Jean-Claude Juncker, said Germany was ill-advised to present itself as the star pupil on fiscal discipline, ahead of a crunch EU summit on Thursday.

Juncker added in an interview with Germany's daily Sueddeutsche Zeitung that the 27 leaders at their two-day talks in Brussels needed to make a bailout fund set up to rescue stricken eurozone countries more "efficient".

"I find it sometimes a bit odd that Germany feels it is surrounded by stability sinners," he said ahead of the summit at which Germany and its allies will try to get EU countries to sign on to stricter budget rules.

"In the last three years there were always between nine and 11 euro member states with less public debt than Germany. That is why it is curious that the Germans think they, as the only virtuous ones, always have to pay for the others. That is not the case."

Juncker, who is also prime minister of Luxembourg, said the rescue fund needed a revamp.

"We must make instruments such as the permanent euro rescue fund more flexible, more efficient and quicker to react," he said.

"Those are signals to the markets that build confidence."

Juncker added that for all the talk of austerity, Europe must not lose sight of an effective strategy for economic growth.

Germany is gunning for changes to the EU's treaty to set deficit and debt limits in stone, with nearly automatic sanctions for countries that break the rules.

Berlin's public debt has grown to about 80 percent of its gross domestic product, far above the 60 percent ceiling set by the EU.

The current bailout fund, the European Financial Stability Facility (EFSF), is meant to be replaced by a permanent fund, the European Stability Mechanism (ESM), next year.

The ESM would have 500 billion euros ($670 billion) in guarantees provided by eurozone states.

Merging these to increase resources even during an overlap period, though, would require support from Germany, which cannot go above strict limits on the size of the guarantees it offers weaker eurozone partners without express parliamentary backing.

© 2011 AFP

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