Merkel Warns More Austerity Needed

“If Europe today accounts for just over 7 percent of the world’s population, produces around 25 percent of global GDP and has to finance 50 percent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life,” Ms Merkel said in the interview.

“All of us have to stop spending more than we earn every year.”

Although Ms Merkel stopped short of suggesting that a ceiling on social spending might be one yardstick for measuring competitiveness, she hinted as much in the light of soaring social spending in the face of an ageing population. Indeed, she says Germany is facing one of the greatest demographic challenges.

Even if a country controlled its debt and deficit, but devoted all its budget to social spending and nothing to research, it would create bad conditions for business to be globally competitive, she said.

via CNBC

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