Germany on defensive as criticism of economic course mounts

German finance minister Wolfgang Schauble put on a brave face at the end of IMF meetings in Washington this weekend, dismissing suggestions Berlin had come under pressure to shift its economic course as "spin doctoring".

However the reality is that Germany has not looked this isolated over its policy prescriptions for Europe since the height of the euro zone financial crisis two years ago.

In Washington Mr Schauble endured lectures from longtime critics such as Larry Summers, the former US treasury secretary.

In an unusually frank panel discussion he accused Germany of leading Europe down a path of Japanese-style deflation with a misguided focus on budget consolidation.

Traditional allies

He also had to listen to advice from traditional allies such as Finland’s

Jyrki Katainen

, a future vice-president of the

European Commission

, who warned that Germany could not remain strong forever if it failed to invest more in its own infrastructure and education system.

The criticism did not go unnoticed in Germany, where the media has so far been supportive of Berlin’s drive for a balanced budget, its rejection of stimulus and its insistence that partners such as France and Italy press ahead with structural reforms despite slowing economies.

In its lead editorial yesterday conservative newspaper Die Welt argued that a weakening German economy should force a policy rethink. It warned that Mr Schauble's push to achieve a federal budget that is in the black in 2015 should not turn into a mindless "fetish".

The Sueddeutsche Zeitung suggested chancellor Angela Merkel's Christian Democrats risked turning into the "Tea Party of Europe" with their single-minded focus on deficit reduction. – (Reuters)