WASHINGTON (Reuters) - The euro zone’s biggest economy Germany has fiscal space to spend more and should do so to boost economic growth and reduce its current account surplus, the head of the International Monetary Fund’s European department Poul Thomsen said on Friday.
“We continue to see a case for Germany to increase spending or cut taxes to boost growth,” Thomsen told a new briefing.
He welcomed Berlin’s plans for a fiscal relaxation of 0.7 percent of gross domestic product in 2019, but said more was needed.
“Looking forward, given the fiscal space Germany has, we can see reforms over several years that would boost spending. We need to see more and keep it coming,” he said.
He said wages in Germany should rise more to better reflect the fall in unemployment.
Reporting By Jan Strupczewski