Merkel insists reforms in eurozone are essential

Wednesday 26 September 2012

PUSHING ahead with painful reforms is the only way Europe can overcome its current financial crisis, German Chancellor Angela Merkel has warned.

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Speaking at a meeting of the Federation of German Industries, Ms Merkel acknowledged Germany was not an island that could disconnect from economic developments in Europe and the world economy.

However, she placed the onus on Berlin's struggling eurozone partners to fix their own economies, rejecting the idea Germany should relax its own productivity drive in order to help its partners.

She said: "We need to take a deep breath to overcome this crisis."We must make the efforts that will allow Europe to come out of this crisis stronger than it went in."There is a lack of confidence on financial markets that some eurozone states can pay back their debts in the long term."The world wonders how competitive eurozone countries are."The German leader said tough reforms in southern Europe had led to some convergence of labour costs across the eurozone.However, she made it clear there was still work to do. She also expressed regret the European Court of Justice had not been given stronger powers to intervene in national budget policies in the eurozone.She said: "We can't have support without controls. The two go hand in hand.The German economy has held up well during the crisis, with unemployment holding near post-reunification lows.However, there are signs that economic weakness across much of Europe and a slowdown in Chinese growth are beginning to bite.She said: "We are feeling that Germany is not an island. We are an export nation. "Forty percent of our exports go to the eurozone, 60% to the European Union."We can't disconnect from European and global economic developments."

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Merkel insists reforms in eurozone are essential

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