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Germany

German Finance Minister denies government rift over eurozone policy

Germany's Finance Minister Wolfgang Schäuble has denied there's a rift in the country's grand coalition government over its eurozone economic policies. But some remarks made by the Economy Minister tell a different tale.

German Christian Democrat Finance Minister Wolfgang Schäuble tried hard to counter media reports on a growing rift in the grand coalition government over how to ensure future growth in the eurozone.

"There are no differences in opinion," Schäuble told public radio Deutschlandfunk on Thursday, suggesting that Europe is on a path to leave the debt crisis behind, and that current budget consolidation policies shouldn’t be changed, otherwise the progress made so far could be endangered.

"It's true we're not out of the wood yet, but there's confidence in our economies, with foreign capital being attracted to Europe almost excessively," the minister argued.

Facing the realities?

Schäuble's comments came in response to remarks made earlier this week by Social Democrat Economics Minister Sigmar Gabriel, who spoke out in favor of giving troubled nations more time to balance their budgets instead of relying solely on harsh austerity measures.

Schäuble defends austerity at Davos

He also floated the idea of not calculating the costs of reform policies as part of deficit spending, so as to make it easier for EU member states to adhere to the bloc's Growth and Stability Pact. The terms of the Pact prohibit Eurozone nations from allowing their annual public deficits to grow larger than 3 percent of gross domestic product (GDP).

Chancellor Angela Merkel's conservative supporters appeared angered by Gabriel's proposals. They insisted heavy government borrowing by Germany's neighbors to spur growth was a direct threat to the stability of the euro.

The debate the Gabriel reopened could spill over into meetings of EU and eurozone minsters scheduled to begin on Thursday. French President Francois Hollande and Italian Prime Minister Matteo Renzi have also warned that the toll of budgetary rigor has been far too high.

hg/nz (dpa, Reuters, AP)

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