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Merkel backs 'in principle' EU plan to revive economy

26 November 2014, 16:22 CET

(BERLIN) - German Chancellor Angela Merkel said Wednesday she backed a new multi-billion-euro European Commission plan to kickstart the EU's flagging economy, if the funds are invested wisely.

"The German government supports in principle the package submitted" by new EU Commission chief Jean-Claude Juncker, Merkel told MPs in the Bundestag lower house of parliament.

"Investment is important... but what's important above all is which projects" it is ploughed into, she said.

France also broadly backed the plan, but stressed that it must be used to bolster Europe's sluggish growth rate.

"France welcomes the proposals although we believe that ... they could be further improved to ensure that investment and therefore growth is a European priority," government spokesman Stephane Le Foll told reporters.

New EU Commission chief Jean-Claude Juncker earlier Wednesday unveiled a 315 billion euro ($390 billion) investment plan to "kickstart" the economy, saying it would show the world that Europe was back in business.

The proposal must still be approved by European leaders in December but would entail an investment fund and a scheme to match new projects with private money.

German Economy Minister Sigmar Gabriel said he was pleased about the EU investment proposal.

"We need more growth in Europe," he told reporters, after talks with Britain's Deputy Prime Minister Nick Clegg.

But he also stressed the need for some EU member states to undertake structural reforms and said money alone was not enough.

The new European Fund for Strategic Investment will be funded from the EU's budget and from the European Investment Bank, although the door is open for direct contributions from member states.

Merkel indicated that Germany would probably not be in a position to offer much financially.

Europe's biggest economy is due to approve its draft 2015 budget later this week foreseeing a balance of its public finances for the first time since 1969.

"And that will also apply for the coming years," Merkel said, adding that Germany had lived beyond its means for years which it was bringing to an end.

Berlin earlier this month said it planned an additional 10 billion euros in public investment by 2018, amid calls by some EU partners to do more to help the eurozone economy.

"It's thanks to budgetary discipline that we can invest," Merkel told the Bundestag.


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