German Finance Minister Wolfgang Schaeuble has revealed that the strength of his country’s economy means Berlin will not have to sell any new government bonds next year – something which has not happened since 1969.
Low unemployment levels and steady growth have produced record tax revenues, while falling interest rates have reduced the financial burden of servicing in Germany’s federal debt.
During the debate in the lower house of parliament on next year’s budget, Schaeuble said Germany had to continue to focus on stability policies: “Anything else would lead to a crisis of confidence,” he said.
“That’s the last thing we need in Europe in the current situation,” he added, referring to crises in Syria, Ukraine and Iraq as well as the Ebola outbreak in Africa.
Schaeuble also stressed the only way for other eurozone countries to achieve sustainable growth is through lower deficits and debt, sticking painful structural reforms.
Germany is under growing pressure from partners like France and Italy to loosen the fiscal reins and use its overflowing government coffers to ramp up public investment.
Worried about the risks of Japan-like deflation, the European Commission, International Monetary Fund and European Central Bank President Mario Draghi are now urging the same.
But Schaeuble insisted it was up to each country to do its reform “homework” and played down the benefits of more public investment.
“We mustn’t allow ourselves to entertain the illusion that we can solve our problems using more and more public funds and ever higher deficits,” he said.
“Calls in Europe to use ever more public funds and higher deficits and debts are misleading. Growth and jobs are not created through ever higher deficits – otherwise we would have no problems now.”