Merkel rules out treaty renegotiation

THE GERMAN chancellor has hit back at the French socialist presidential candidate, François Hollande, insisting that the fiscal treaty is “not up for renegotiation”.

Mr Hollande has told French voters that, if elected president next month, he would reopen the pact to add components to boost job creation and economic growth.

“The fiscal pact has been negotiated, it was signed by 25 government heads and has already been ratified by Portugal and Greece,” said Angela Merkel in a newspaper interview yesterday. “Parliaments all over Europe are about to adopt it, Ireland has a referendum on it at the end of May. It is not up for renegotiation.”

The German leader, whose Christian Democrats are facing two important state elections next month, rejected criticism that EU reform measures were too austerity heavy with not enough being done to encourage growth.

“The subject of growth, which many are calling for, has long been our second policy pillar alongside solid finances,” said Dr Merkel, adding that EU leaders had agreed to present concrete growth proposals at their June summit.

Rather than soften her tone, the German leader has reiterated her belief in austerity. “Many people say that if we save, then we’re going to have a lot of difficulties,” said Dr Merkel in Flensburg, near the Danish border, “but if you save at the right time, if you save logically and undertake structural reforms, [it] will lead to economic strength, growth, good conditions for businesses, less bureaucracy and more jobs.”

Too much debt “harms countries’ ability to make their own decisions, making them more dependent on markets and forced to step up savings and cutbacks”.

The dispute has thrown into focus the competing ideologies at the debate’s heart. While many of its neighbours believe stimulus is as important as saving, Germany’s economic consensus is that supply-side cuts are the way to restore economic health.