Wolfgang Schaeuble has no mandate to tell us to spend more

German Finance Minister Wolfgang Schaeuble said on Friday that the European Commission, which has effectively urged Germany to spend more in 2017, did not have the right to decide on how much fiscal room for maneuver EU members has.

“We are bound by European law and so is the Commission. The Stability Pact says that budgets are reviewed by the member states. The Commission has instead reviewed fiscal space for the euro zone and it has no mandate for that,”

-Schaeuble said at an event in Berlin organized by the Sueddeutsche Zeitung newspaper.

The Commission did not explicitly name Germany, where Chancellor Angela Merkel’s conservatives face an election next autumn complicated by the emergence of the fiscally hawkish, eurosceptic AfD, in its recommendation for the whole euro zone.But because France, Italy, and Spain are among those butting up against the currency union’s budget deficit limits, only Berlin has the scope and economic weight to make a difference.The European Commission on Wednesday called for the 19-country eurozone, in which Germany is the largest economy, to loosen overall budget policy next year.Schaeuble said it was necessary to stick to Europe’s Stability and Growth Pact to protect the euro currency.

Starting from 2012, Germany has been exceeding that goal and has even had surpluses from 2013. The Commission has been recommending therefore that Berlin spend more domestically to make its export-driven economy less dependent on external demand.

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