Merkel vows to stick with EU austerity

Ms Merkel dismissed opposition calls to scrap or scale back regressive structural “reforms” within the EU.

“Growth through structural reform is sensible, important and necessary,” she told MPs.

“Growth through debt would throw us back to the beginning of the crisis and that’s why we haven’t done it and won’t do it.”

Social Democrat Party (SDP) leader Frank-Walter Steinmeier accused Ms Merkel’s administration of “political lethargy” and lack of courage.

“Germany and Europe will only come out of the crisis if we have the courage to prioritise growth,” Mr Steinmeier declared.

The opposition leader said that the introduction of an EU-wide tax on financial transactions would be a step in the right direction.

And he said that Germany had not been hit as hard as other EU countries by the economic downturn because previous governments had introduced “a blend of austerity and growth policies.”

Debate over the future of European austerity measures has flared up in recent days following elections in France and Greece.

Socialist candidate Francois Hollande won France’s presidential elections on Sunday after campaigning for a greater emphasis on growth rather than public sector cuts.

And in Greece most people voted for anti-austerity parties when they went to the polls on Sunday.

Mr Steinmeier said the elections were harbingers of what Ms Merkel could look forward to in the general election set to take place next year.

“The game is over, and you, Mrs Merkel, know this very well,” he said.

Left Party leader Oskar Lafontaine called for a progressive alternative to austerity in a speech to striking Opel workers on Tuesday.

“Those who caused the crisis should foot the bill for their gambling and we are therefore calling for a millionaire’s tax,” Mr Lafontaine said.

The Left Party is also proposing the establishment of a “Europe-wide investment programme for future socio-environmental restructuring, short-term stimulus packages in crisis states and a penalty-free minimum income systems.”