Germany bares teeth as EU broaches stimulus spending

By Jan Strupczewski and Paul Carrel

BRUSSELS (Reuters) - Germany flatly rejected pressure on Monday to do more for Europe's battle against recession, vowing not to be lured into a "senseless" public spending contest that could unravel years of work to balance its books.

The message was delivered by German Chancellor Angela Merkel and relayed by Finance Minister Peer Steinbrueck when euro zone finance ministers met to discuss proposals that the European Union inject 200 billion euros (169 billion pound) into the economy.

"We will not take part in a competition to outdo one another with an endless list of new proposals, in a senseless contest over billions," Merkel said.

That looked like a barb largely directed at French President Nicolas Sarkozy, who last week publicly vented his frustration with Berlin's recession response, saying: "While France is working, Germany is thinking."

Steinbrueck told reporters that Germany had already unveiled two plans worth 31 billion euros, or 1.25 percent of its gross domestic product (GDP), to tackle the downturn.

"That is apparently not being registered by many who are observing us. Furthermore, we are not obliged to copy what all other countries are doing," he said.

The European Commission, the EU's executive body, proposed last Wednesday that governments spend an extra 1.2 percent of GDP from their budgets, mainly in 2009, to boost investment and consumer demand and thus limit the downturn.

Finance ministers from the 15 euro zone countries met for a first collective look at the idea in Brussels on Monday evening and were due to widen talks on Tuesday to ministers from all 27 EU nations.