German Finance Minister Wolfgang Schaeuble said deficit-fueled growth leads to economic decline, signaling discord with Italy and France as euro-area policy makers seek ways to avoid deflation and spur growth.
Euro-area countries that pursued austerity policies in return for sovereign bailouts are “doing much better than all the others in Europe,” Schaeuble said at a town-hall event in Berlin yesterday. “That’s how it is with medicine: sometimes it tastes bitter for a while. But if it helps, that’s good.”
With France urging the European Central Bank to help spark its stagnant economy, German Chancellor Angela Merkel called ECB President Mario Draghi last week to clarify his stance on fiscal discipline after he suggested governments could spend more to promote growth, Der Spiegel reported in this week’s magazine. Hollande is due to meet with Draghi today in Paris.