German Chancellor Angela Merkel on Tuesday rejected calls for Berlin to ditch its plans for a balanced budget next year and to instead invest more in order to shore up the faltering German and Euro zone economies. On Tuesday Germany slashed its 2014 growth forecast from 1.8% to 1.2%.
Germany has come under increasing pressure internationally to shift its economic course, which targets a schwarze Null - a federal budget in 2015 that is in the black.
Germany's stance is important. If we stray from our path then that gives grounds for others to do the same, she told fellow Christian Democrats (CDU), according to participants at a party meeting.
We are in a phase again where our pledges in Europe have to hold weight, Merkel said.
The chancellor warned against exaggerating a debate over slowing economic momentum in Germany, noting the situation was very different from 2009, (the midst of the global financial crisis), when Germany's economy declined 4.7%.
Germany's leading politicians including Finance Minister Wolfgang Schaeuble and Economy Minister Sigmar Gabriel have all refused to abandon the goal of their right-left Grand Coalition to balance the budget for the first time since 1969.
Even if Berlin were to borrow to modernize its roads and railways, broadband networks and energy grids, that would not create more growth in weak Euro zone countries, Gabriel says.
Germany has been criticized by economic organizations such as the International Monetary Fund (IMF), the European Commission, the European Central Bank and the Organization for Economic Co-operation and Development (OECD) for failing to use its large current account surplus and budgetary room for maneuver to invest in its creaking infrastructure.
Germany on Tuesday slashed its official growth forecasts to 1.2% for 2014 from a previous 1.8%, and to 1.3% in 2015 from 2.0%, blaming crises abroad, notably with Russia, and moderate global growth.