European Debt Crisis

Angela Merkel calls for strict government spending rules

Stephen Beard Dec 2, 2011

Mitchell Hartman: In Europe, Germany’s chancellor, Angela Merkel, this morning is outlining a new future for economic policy, which is reassuring investors and driving down the cost of government borrowing.

From London, Marketplace’s Stephen Beard has our story.

Stephen Beard: The crisis was caused by governments in the eurozone spending more money than they could afford. Chancellor Merkel today called for a new legally binding set of rules to control that spending. There would be close scrutiny of the national budgets by the European Commission in Brussels, and stiff fines for any country that broke the rules.

Yesterday, the head of the European Central Bank said the bank would intervene further to help the euro, if there were such moves towards closer fiscal union.

Steve Barrow is a currency strategist with Standard Bank in London. He says investors have been slightly reassured now over the most fundamental question in this crisis.

Steve Barrow: Will the ECB use its unlimited resources to aid the eurozone? That seems, perhaps, more likely if there’s better budget discipline in the eurozone than there is right now.

Chancellor Merkel will discuss the planned budget reforms with the French president on Monday. They’ll both present the plan to a crucial EU summit one week from today.

In London, I’m Stephen Beard for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.