Steinbrück rejects EU stimulus plan idea

German Finance Minister Peer Steinbrück on Friday rejected the idea of a European stimulus plan to revitalize the economy, as EU finance chiefs gathered to map out a way to avert a recession.

Steinbrück rejects EU stimulus plan idea
Photo: DPA

“I think there is no need for a European stimulus package. Every country is responsible for itself … it makes no sense to burn money,” he told reporters in Nice, southern France.

The two-day meeting of finance ministers and central bankers on the French Riviera comes amid growing fears that the European economy is headed for a recession.

The European Commission on Wednesday said that Europe was teetering on the brink of a technical recession, which economists define as two consecutive quarters of contraction.

After the 15-nation euro-zone economy contracted 0.2 percent in the second quarter, the European Union’s executive arm estimated that it would be at a standstill in the third quarter.

Unlike other global economic heavyweights, Europe has few options for tackling the growing crisis.

Ever vigilant about inflation, the European Central Bank is unlikely to give a boost to the economy by cutting interest rates until at least next year, according to economists.

On the fiscal front, few European countries have budgets strong enough to allow for major tax relief or spending programmes such as in the United States and Japan without breaking the EU’s strict public deficit rules.

Among the major euro-zone economies, only Germany has healthy public finances, but Steinbrück has repeatedly refused to loosen up fiscal discipline even though the commission estimates that Europe’s biggest economy is already in recession.

Steinbrück disputed Brussels’ prognosis, telling journalists: “I think we are not facing in Germany recession, (but) we are facing a lot of slowdown risk undoubtedly.”