Germany Introduces Austerity Measures
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Germans are trying to restore confidence in the European currency the euro. That's why German Chancellor Angela Merkel announced budget cuts. By spending 85 billion fewer euros, she hopes to set an example for a continent where many governments are in financial trouble. NPR's Eric Westervelt reports from Berlin.
ERIC WESTERVELT: Meantime, some economists call the 85 billion over four years too modest to make a real impact, while other economists, including Phillip Engler of Berlin's Free University, say the cuts risk stifling growth and driving down prices during a fragile recovery.
PHILLIP ENGLER: I think it is a real fear, because the problem in Europe is that inflation's already extremely low, and if now European governments all start at the same time to cut their spending, then this will certainly go to deflationary pressure. Nobody really knows what markets really want or what they need and how they react to this signal or that signal. It's all guessing.
WESTERVELT: Eric Westervelt, NPR News, Berlin.
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