German lawmakers have agreed to ratify the eurozone's fiscal compact later this month. German Chancellor Angela Merkel once again defended her policy of putting budget consolidation before growth.
German Chancellor Angela Merkel's ruling coalition of Christian and Free Democrats on Thursday struck a deal with opposition parties to ratify the euro area's fiscal compact on tighter spending rules on June 29. The agreement also includes ratification of the European Stability Mechanism (ESM), the new and permanent bailout scheme for member countries in fiscal crisis.
Earlier on Thursday, Merkel used a speech to the lower house of parliament to once again defend her approach to the eurozone crisis ahead of a G20 summit in Mexico next week. The chancellor stressed that strengthening economic growth must go hand in hand with budget consolidation.
"We must all resist the temptation to again finance growth through new debt," Merkel told the Bundestag in a government policy statement.
Reacting to mounting pressure from other world leaders, Merkel said they should not overestimate Germany's ability to find a way out of the eurozone debt crisis. She added her country's options for rescuing the 17-nation single currency bloc were "not unlimited" and cautioned against stop-gap measures as a way of handling the crisis.
Opposition not convinced
The chancellor said Europe had no choice but to press ahead with closer political integration.
"It's our task today to make up for what was not done when the euro was created and to end the vicious circle of taking on new debt, of not sticking to rules," she said.
"I know it's arduous and painful and that it's a Herculean task, but it's unavoidable," Merkel added.
Opposition Social Democrat floor leader Frank-Walter Steinmeier accused the chancellor of keeping a low profile and taking a wait-and-see approach to solving the problem. He also said Germany as Europe's biggest economy must do more to curb the debt crisis and look for more efficient ways of stimulating growth.
"More and more bailout mechanisms just aren't of any use, if we completely stifle growth across the continent," Steinmeier warned.