With Europe’s economic and debt crisis, termed as one of the most difficult since World War II, deepening with each passing day, the 27-member bloc is increasingly looking towards economically strong Germany to show the way out of the woods.
The Germany Chancellor, Angela Merkel, has been quoted in the local newspapers terming the current debt as “Europe’s most difficult hours since World War II” and insisting that Europe should address the present crisis on the long term basis instead of “one quick solution after another”.
With Italy and Greece still struggling to come to terms with the economic crisis that has hit them badly, Germany with a health 3 per cent gross domestic product (GDP) growth in 2011 continues doing well with predictions that the crisis is likely to have an adverse impact on the growth in 2012. “The situation is very worrisome in the Euro zone. A lot of uncertainty prevails even as Germany is doing well. We have had an excellent 2011 and the projections for 2012 could bring down growth to around 1.2 per cent in view of the economic turmoil being witnessed around the globe,” Germany's Head of Foreign Trade Division, Berend Diekmann told visiting Indian journalists.
In fact, industrial production in Euro zone plunged 2 per cent in September from August, one of the steepest slides since February 2009. “The dates suggests the euro-zone will soon fall back into another fairly deep recession,” The Wall Street Journal quoted Economist at Capital Economics, Ben May as saying.
Germany, as Europe's biggest economy, has been instrumental in setting the agenda for the rescue measures that are needed and has insisted on major reforms, which are termed painful, in exchange for financial aid to the troubled nations. Indicating that growing role and influence of Germany in the Euro debt crisis, Volker Kauder, the Parliamentary leader of Merkel’s conservative bloc, said: “now German is being spoken in Europe -- not in terms of the language, but in the acceptance of the instruments for which Chancellor Merkel has fought for so long and then successfully.”
However, there is resistance to some German stances. Officials from countries including France and Ireland have argued that the ECB's unlimited firepower should ultimately be brought to bear to bring down the cost of borrowing for pressured nations, such as Italy.
But Germany is facing opposition to its idea of reforms for resolving the debt crisis from countries France and Ireland who argue that the European Central Bank (ECB) should be intervene strongly to bring down the cost of borrowing for pressured countries like Italy, Greece and lately Spain, a strand that Germany feels will stoke inflation and not resolve the real financial crisis and issue of budget management.