11 May 2012

Merkel rejects borrowing for growth

11:07 am on 11 May 2012

German Chancellor Angela Merkel has rejected any change of course on tackling the euro zone crisis and says resolving it will be long and exhausting.

Ms Merkel has told the German parliament cutting debts and encouraging growth are essential, but growth through borrowing would be a mistake.

"Growth through structural reforms is sensible, important and necessary. Growth on credit would just push us right back to the beginning of the crisis, and that is why we should not and will not do it," she told the Bundestag.

There have been growing calls to soften or abandon austerity measures following weekend elections in France and Greece which saw leftist parties make gains.

Germany's centre-left opposition is calling for a growth pact for Europe to be added to the German-led fiscal pact for budgetary discipline which has been signed by 25 European Union countries but has yet to be formally ratified by many parliaments.

Ms Merkel said the fiscal pact was not up for grabs. "It's been negotiated by 25 countries which have signed it. There's also a basic principle in Europe that we don't reopen agreements after elections."

Newly elected French president Socialist Francois Hollande will meet Ms Merkel next week. The BBC says he is expected to tell her that the French people have given him a mandate to make growth his priority.