GERMANY and the US clashed at the World Economic Forum in Davos, Switzerland, today over how to restore economic growth
Former US Treasury secretary Larry Summers said that economic forecasts remained “dismal” and praised European Central Bank (ECB) boss Mario Draghi for committing to quantitative easing.
Governments needed to accept the need to increase public spending to strengthen economies, he said.
But austerity-mad German Chancellor Angela Merkel distanced herself from the ECB position, remarking pointedly that it was “totally independent.”
She added that the bank would be unable to tackle Europe’s economic woes and demanded continued spending cuts.
Finnish Prime Minister Alexander Stubb also warned that the neoliberal direction of EU policy would not change, even if the weekend’s elections put left populist party Syriza into power in Greece.
“It will be very difficult for us to forgive any loans or restructure debt,” he said.