The region must reject the old patterns of borrowing and embrace reform, writes Germany's foreign minister in the FT.
Europe faces a choice: either it continues its carefully balanced combination of solidarity, growth through increased competitiveness and budget consolidation; or it tumbles back into old debt-making policies that failed. This would be fatal because there is indisputably a connection between sound financial policy, growth and employment. Today the highest unemployment levels are recorded in those countries where insufficient attention was paid to the rules of solidity – because no one is investing there. So anyone who falls back into the old patterns of borrowing won’t be making anything better, but will be cementing mass unemployment for years and decades to come.
There is no short-cut to improve competitiveness – even if the chosen remedy is a bitter pill to swallow. Germans, too, know this first-hand. Getting the right combination of reforms is crucial. They need time, but they work. It is equally important that people do not lose faith in the remedy. That is why tackling unemployment, and especially cutting youth unemployment, has to be the priority on the European agenda. Being jobless is a tragedy for the individual and unemployment is a tragedy for the economy as a whole. No country can waste the working capacity or inspiration of its people...
A permanent pursuit of reforms is needed across Europe. Of course, that imperative does not stop at Germany’s borders. We were better off than many of our European partners and still are because we engaged early enough in tough and painful reforms and because we started fiscal consolidation in the beginning of 2010. Thus, Germany did not fall prey to the psychological maelstrom of the debt crisis.
However, it would be a grave mistake to believe that Germany needs no further reform. We should remember Germany was considered the “sick man of Europe” just 10 years ago. That is why the German government works hard to achieve sustainably healthy public accounts including a federal budget without any deficit in 2014 and strives to improve competitiveness while strengthening domestic demand and attracting qualified young Europeans into our labour market. We know in the long run the German economy cannot prosper if our European partners are not doing well.
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