Tuesday, February 7, 2012

Merkel makes case for painful reform

Financial Times
February 7, 2012

Angela Merkel last night swore eurozone partners to a long and painful process of structural reform to restore the economic growth the eurozone needed to overcome its debt crisis.

Germany’s chancellor also stressed that reforming Greece outside the eurozone was not an option.

“I will not participate in pushing Greece out of the eurozone,” she said. A eurozone exit was “not an issue”.

In a speech in Berlin about the future of Europe, Ms Merkel harked back to the labour-market reforms of her predecessor Gerhard Schröder, which cut German unemployment from more than 5m in 2003 to under 3m today.

While the reforms were unpopular at the time, this trend showed that “change can bring something good” and make things better even for those initially opposed.

With her emphasis on structural reform, the chancellor was trying to counter criticism of her handling of the eurozone crisis, which some eurozone partners think has focused too much on austerity rather than growth.

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