Merkel, Scholz push back against demands for higher public spending

BERLIN (Reuters) - German Chancellor Angela Merkel and Finance Minister Olaf Scholz on Monday brushed aside demands by the BDI industry association and the DGB labour union to ditch their balanced budget policy and boost investment with a debt-financed spending plan.

Merkel told reporters after a cabinet meeting that the "black zero" policy of no new borrowing remained the guiding principle as the government was still able to generate growth.

Scholz said the government had already increased public investment to record levels, adding that he viewed the rare joint spending call by BDI and DGB rather as a support of his expansionary fiscal policy.

(Reporting by Michael Nienaber, editing by Tassilo Hummel)