German finance minister Schäuble rules out fiscal easing

While the financial markets can expect the new US administration under newly elected President Donald Trump to take the easing baton from the Federal Reserve, such a possibility is very grim for Eurozone. The European Central Bank (ECB) has raised the issue many a time, saying that countries, which do have the ability to spend more like Germany to do so as the central bank can’t alone provide the necessary sustainable growth and inflation. Germany has very critical of the ECB at this front.

German Finance minister, Wolfgang Schäuble, who has immense influence being the finance minister of the largest economy and largest credit in the Eurozone, has ruled out the possibility of a fiscal stimulus and said that the Eurozone should stick to its strict debt and deficit rules.

He said that the European commission’s attempt to provide fiscal stimulus next year by loosening the current austerity in the tune of 0.5 percent of GDP is beyond the commission’s mandate and driven by politics. He said that the government should stick to “Stability and Growth pact” that limits public debt at 60 percent of GDP and budget deficits no more than 3 percent of GDP. He warned that the European Commission has no authority to give the member countries greater discretion over fiscal spending.

While Germany has been trying to set up an independent body to monitor public finances of all 19-members of the bloc, Brussels has been pushing for some sort of fiscal stimulus to improve upon growth.