Loose talk threatens financial lifeboat: Berlin

8th August 2011, Comments 0 comments

Germany Monday rejected calls to boost funding for the European Financial Stability Facility (EFSF) while warning that loose talk might sink, or at any rate capsize, Europe's economic lifeboat.

There are no plans to boost the fund beyond the 440 billion euros ($624 billion) agreed by eurozone heads of state and government at a summit on July 21, deputy government spokesman Christoph Steegmans said.

"The EFSF must remain as is," the spokesman told a regular briefing after top European Union officials, including commission president Jose Manuel Barroso and economic affairs commissioner Olli Rehn, suggested the fund might need more money to bolster eurozone debt-ridden economies.

French Finance Minister Francois Baroin on Monday also reaffirmed that while the fund stands at 440 billion euros "we have already said we are ready to go further if need be".

Asked why Germany did not speak out more publicly to offer reassurance to turbulent financial markets, Steegmans said talk often just generated panic.

"Over the past weeks, a number of media figures have made headlines that did not have the desired effect," he told reporters.

Chancellor Angela Merkel, for her part, saw no need to break her holiday, he added.

The chancellor has returned to Berlin from her annual hiking holiday in northern Italy, but she will only resume work at the end of the week.

Her absence from the bridge has however fueled criticism at home.

Carsten Schneider, spokesman for the opposition Social Democrats on financial matters, blamed Merkel for worsening financial turmoil which saw the Frankfurt DAX index of leading shares lose more about five percent in trading Monday afternoon.

"In such a year the government cannot afford to be on holiday," he told Spiegel magazine's online edition at the weekend.

"Politicians must break the financial markets' trading logic and once again assert their primacy," he said.

"Merkel's reluctance and hesitations are only worsening the crisis," a leader of the opposition Green party, Juergen Trittin, warned for his part.

Last week, as stock markets fell around the world, a spokesman for Germany's finance ministry had simply blamed much of the panic on low-level summer holiday trading which amplified any movements up or down.

Asked if parliament would meet early to vote on EFSF measures, Steegmans suggested there were no plans for it to do so.

German members of parliament return to work on September 5, a day ahead of their French colleagues who are also to debate the EFSF issue.

© 2011 AFP

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