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Merkel rejects calls to drop austerity measures


German Chancellor Angela Merkel

German Chancellor Angela Merkel

German Chancellor Angela Merkel

GERMAN Chancellor Angela Merkel has rejected calls to abandon austerity measures.

She said structural reforms alongside austerity remain the only way Europe can get through its financial crisis.

In a speech to the German parliament, Mrs Merkel rejected calls to abandon or scale back austerity measures in certain countries that use the euro.

Debt reduction and growth are the "two pillars" of the strategy needed to bring the bloc out of the crisis, she said.

Mrs Merkel said: "Growth through structural reform is important and necessary - growth through debt would throw us back to the beginning of the crisis."

Europe's debt crisis has flared up again in recent days after Greek and French elections highlighted the scale of opposition to austerity.

Meanwhile, chief executive of the European Financial Stability Facility (EFSF) Klaus Regling has warned that Greece will not receive any more funding after June until EU/IMF/ECB officials conclude their latest assessment on the country’s financial affairs.

“Under the existing first tranche, which was already approved some time ago, there's another €1bn available for debt service in June, but then there has to be a new troika visit and an agreement on what happens on the second half of the year and next year, so there will be no further disbursement before there is an agreement with the troika,” he said.

Greece has entered a third day without a Government as coalition talks continue.

New figures show that unemployment in Greece rose again with 53.8pc of under-25s out of work in March.

Meanwhile, the Spanish government was forced to take effective control of Bankia, one of the country's biggest banks in a bid to put an end to its four year banking crisis.

Extra measures to strengthen ailing lenders are expected tomorrow.