German Finance Minister Peer Steinbrueck said the euro might be hurt if member states stray from European Union budget rules, warning nations to exercise spending discipline or risk priming the next financial crisis.
Germany has a “massive” interest in the EU’s Stability and Growth Pact, which limits debt to 3 percent of gross domestic product, Steinbrueck told lawmakers in Berlin today.
Yet the treaty “isn’t exactly being taken seriously by some,” Steinbrueck said in the lower house of parliament, or Bundestag. “If it’s not taken seriously, then the euro at some point will have problems with credibility and stability.” The euro declined after Steinbrueck’s comments, trading at $1.3304 at 3:30 p.m. from $1.3560 earlier today.
EU nations’ budget shortfall will more than double to 4.4 percent of GDP this year, the biggest deficit in 13 years, as governments pump billions of euros into their economies to stave off the worst economic slump since World War II.
Steinbrueck, in a later speech at the Finance Ministry during an event with Swedish Finance Minister Anders Borg, said that “even the biggest stimulus package” won’t avert the recession without creating confidence in financial markets.
“I see with growing alarm that we’re getting into debt levels, in individual countries and worldwide, that can strain capital markets to the point that we may be pre-programming the next crisis,” Steinbrueck said. “With the dimensions we’re talking about, it’s bound to happen.”
From Bloomberg News.
Germany has a “massive” interest in the EU’s Stability and Growth Pact, which limits debt to 3 percent of gross domestic product, Steinbrueck told lawmakers in Berlin today.
Yet the treaty “isn’t exactly being taken seriously by some,” Steinbrueck said in the lower house of parliament, or Bundestag. “If it’s not taken seriously, then the euro at some point will have problems with credibility and stability.” The euro declined after Steinbrueck’s comments, trading at $1.3304 at 3:30 p.m. from $1.3560 earlier today.
EU nations’ budget shortfall will more than double to 4.4 percent of GDP this year, the biggest deficit in 13 years, as governments pump billions of euros into their economies to stave off the worst economic slump since World War II.
Steinbrueck, in a later speech at the Finance Ministry during an event with Swedish Finance Minister Anders Borg, said that “even the biggest stimulus package” won’t avert the recession without creating confidence in financial markets.
“I see with growing alarm that we’re getting into debt levels, in individual countries and worldwide, that can strain capital markets to the point that we may be pre-programming the next crisis,” Steinbrueck said. “With the dimensions we’re talking about, it’s bound to happen.”
From Bloomberg News.