Steinbrueck says Europe in recession

BRUSSELS (Reuters) - The European economy is in recession but not about to go into meltdown, German Finance Minister Peer Steinbrueck said late on Monday.

"The European economy is not facing collapse, please," he told reporters in Brussels in remarks embargoed for Tuesday.

Germany is facing pressure from other European Union countries to do more for the bloc's battle against recession.

"The pressure is perceptible and goes along the lines of 'the Germans were very successful with their (budget) consolidation and so now they have the most room for manoeuvre'," he said.

But he added that Germany could not be praised for putting its public finances in order and then be pressed to spend more because other states had not reduced their debts as much.

"Then there is no longer an incentive ... to balance the books, because we don't know exactly whether in the next upswing we will be the ones who have to empty their pockets and pay again," he said.

Steinbrueck added that EU states should form a plan in the coming year to restore the bloc's Stability and Growth Pact, which sets out its budget rules, to normal guidelines after a flexible phase.

Some EU states are set to breach the Pact's limit on budget deficits of 3 percent of gross domestic product (GDP) this year due to stimulus packages they are implementing.

(Reporting by Ilona Wissenbach; writing by Paul Carrel)