WASHINGTON (Reuters) - Germany has money in the budget to increase public spending on infrastructure and should do that, the head of the International Monetary Fund’s European department said on Friday, but cautioned that this won’t solve Europe’s slow growth problem.
“We clearly think that Germany has some fiscal space and that it should use it, but ... the problem with low growth in the euro zone is mainly structural and requires structural reforms in individual countries,” the head of the European department Poul Thomsen told a news briefing.
“We should not believe that just to get Germany to do more is going to solve Europe’s growth problem,” he said.
Germany is the biggest economy in Europe and had a budget surplus of 0.7 percent of GDP last year and is expected to have a surplus, although smaller, also this year and next.
Reporting By Jan Strupczewski