“Indebtedness is the biggest danger for prosperity on this continent. This is why we have to resolutely work against it,” Merkel told business leaders gathered at the Davos meeting of the World Economic Forum.
The leader of Europe’s biggest economy also renewed her pledge to defend the bloc’s single currency, adding that “there is no doubt about this and we need to pursue a policy of euro stability.”
Germany has been pushing for reforms in the eurozone, calling for indebted countries such as Greece and Ireland to reduce their borrowing and Merkel pointed to her own country as an example.
“Budget consolidation remains of prime importance to us and has not caused us any problems, quite the opposite,” said Merkel.
The German economy has rebounded strongly from a deep recession to register record output last year and Merkel noted that her country, the world’s second-biggest exporter after China, had also reduced its reliance on exports.
“Consumer confidence has returned to Germany and we have a strong boost to
domestic consumption,” she said.
“That to me shows that sound fiscal policy and growth do not need to be a contradiction in terms,” she argued.
Merkel echoed earlier comments at Davos from French President Nicolas Sarkozy, who pledged that Paris and Berlin would “never abandon the euro.”
“There is no crisis of the euro as such. This is essentially a debt crisis … we now have to overcome it,” she told the assembled delegates.
“If the euro fails, then Europe fails,” she reiterated.