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IMF chief Lagarde weighs in on austerity

Cape Argus (South Africa)

GENEVA : International Monetary Fund (IMF) chief Christine Lagarde wanted Germany to play a bigger role in propelling economic recovery in Europe , she hinted in an interview broadcast yesterday, suggesting that German wages should rise.

Part of her remarks may be interpreted by personalities on the left of French politics as going in the same direction as French Economy Minister Arnaud Montebourg's criticism at the weekend of French, German and EU austerity policies.

Montebourg's attack on the thrust of the French Socialist government's policy caused a crisis yesterday when President Francois Hollande told Prime Minister Manuel Valls to form a new government.

Lagarde, pictured, told Swiss public broadcaster RTS: "What I think is very important for Germany is to participate in the recovery movement in a very intense way. It has the means to do so."

Describing the European economic recovery as "laborious", Lagarde stressed that the continent's economic powerhouse had "room for manoeuvre" - as seen in recent wage |negotiations.

"That leeway has been disclosed in the salary negotiations between the unions and the employers' organisations," she said, adding that "hopefully that movement will be amplified and will help propel the European recovery".

On Saturday, Montebourg criticised German austerity measures and warned that France would no longer "be pushed around".

He told the Le Monde newspaper: "You have to raise your voice. Germany is trapped in an austerity policy that it imposed across Europe ."

Those comments follow Germany's snubbing of a request from Hollande earlier this month for an EU-wide shift of economic policy in order to encourage growth.

Asked by RTS how Europe should negotiate the line between "austerity" and "recovery", Lagarde said "a lot of austerity" had been put in action.

"We have seen a process of very strong budget tightening over the past three years," she said, stressing that "more should not be done". - Sapa-AFP

Cape Argus

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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