Business Week

Germany Rejects Obama’s Call on Growth, Stoking G-20 Conflict

Chancellor Angela Merkel’s government rebuffed U.S. calls to focus on bolstering growth over debt reduction, setting a course for conflict at the Group of 20 summit in Canada this week.

“Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis,” Finance Minister Wolfgang Schaeuble told reporters in Berlin today alongside Merkel. “That’s why they have to be reduced.”

Five days before G-20 leaders meet in Toronto, the economic-policy divide between Europe and the U.S. is hardening. President Barack Obama, in a letter to his G-20 counterparts dated June 16, urged a focus on economic growth, saying order to public finances should be restored in the “medium term.”

German Economy Minister Rainer Bruederle, at a separate press conference earlier today, said the U.S. must join Europe in “urgently” cutting spending. “It’s urgently necessary for monetary stability that public budgets return to balance,” Bruederle said. “This is something we should also tell our American friends.”