Germany Signals Austerity Leeway in Budget-Rule Flexibility

A German Finance Ministry official said that budget-cutting rules must allow for flexibility, opening a chink in Chancellor Angela Merkel’s austerity-first policy as the only course to rescue Europe from its debt crisis.

Rules governing how the euro area’s 17 members scale back deficits are not absolute and must respond to a shifting economic outlook, Deputy Finance Minister Steffen Kampeter said. He was responding to comments by European Commission President Jose Barroso that the path of austerity had reached its limits.