Germany will continue to demonstrate its solidarity with Portugal

After her meeting with Pedro Passos Coelho, Angela Merkel explicitly praised the efforts made by Portugal to rein back expenditure, and praised the "courageous actions" of the government in Lisbon. Growth has to come from the private sector she said, and is very urgently needed.

The reforms are hard for the people, said Angela Merkel, but she could sense their determination to make the necessary adjustments. This is already reflected in the country’s new improved competitiveness. The Chancellor promised the continued solidarity of Germany.

Austerity measures realised faster than originally planned

Prime Minister Pedro Passos Coelho underlined the fact that Portugal is on track with its austerity and reform programme. Within only two and half years, he said, his country has already achieved goals originally planned for 2016. Foreign trade figures are balanced. Portugal has the determination to wind up the programme by 2014 and then to return successfully to the financial markets.

The Prime Minister expressly thanked the Chancellor for her assistance and rejected any criticism. She has always been on Portugal’s side, he said. On its further path Portugal will continue to trust in the help of European partners and the International Monetary Fund to get the country back on an even keel.

Angela Merkel calls for clarity on EU financial planning

Chancellor Angela Merkel pointed out that Germany would also like to support Portugal in the field of vocational training. And she called for swift clarity with respect to the EU’s future financial planning. In this context she called for closer economic cooperation within Europe. The very different levels of competitiveness of member states is, she said, one of the reasons for the euro crisis.

The Chancellor defended the reform programme. "Austerity programmes are not an end in themselves", she said. "It is not some programme that Germany or any other country has dreamed up." The IMF is also on board, she pointed out. We cannot go on building up more and more debts that will make it impossible for future generations to attract investors and create jobs.

After their talks Angela Merkel and Pedro Passos Coelho attended a German-Portuguese business meeting, which had been organised jointly by the Association of German Chambers of Commerce and Industry, BDI the Voice of German Industry, and their Portuguese opposite numbers.

Political relations between Germany and Portugal are sound and build on a broad foundation. Thanks to close consultations before and during their consecutive EU Presidencies in 2007, political relations were further stepped up. The Treaty of Lisbon was prepared during the German Presidency and signed during the Portuguese Presidency. The two countries broadly agree on international and European policy. Also on critical issues like how to overcome the euro crisis, the two governments are cooperating closely on a basis of mutual trust.

Important trading partners

Germany is Portugal’s second most important trading partner – it trades more only with Spain. Germany accounts for some 13 per cent of Portuguese exports and imports, and exports significantly more to Portugal than it imports.

German-Portuguese economic relations have benefited to a great extent from the shift in labour-intensive industries from Germany to Portugal. Since the start of the 20th century, German businesses have operated their own production and manufacturing facilities in Portugal. Until the outbreak of the current financial and economic crisis they topped the ranking list of gross investments.

Although a number of German businesses have pulled out of Portugal in recent years, to take advantage of lower-wage countries, Germany remains an important force, especially in manufacturing industry. New fields of cooperation include medical technology and renewable energies.

Press release