Markets | Wed Jun 26, 2013 12:20am IST

Merkel says Germany knows it must stimulate domestic demand

BERLIN (Reuters) - Chancellor Angela Merkel said on Tuesday that Germany knows that it must stimulate domestic demand where possible in order to help boost growth in Europe.

Merkel said in a speech to business leaders from her conservative party that Germany, which has emerged largely unscathed from the euro zone crisis, is aware of the fact that it has a responsibility not only as an anchor of stability in the European Union but also as a motor for growth.

She said she would do everything to ensure "that Germany is not just the stability anchor of Europe but also the growth motor of Europe. We can contribute to that in Europe by stimulating domestic demand wherever possible."

Merkel said entrepreneurs were "our treasure in Germany and it would be fatal in the current fragile economic situation to tax such people more. It would be demotivating".

She spoke alongside Dutch prime minister Mark Rutte, who said Europe had to undertake reforms that were often unpopular, but he quoted German author Thomas Mann saying "anyone who is only ever loved is a clod".

(Reporting By Stephen Brown and Andreas Rinke; writing by Erik Kirschbaum; editing by Ron Askew)

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