German policies could hurt European growth: George Soros

NEW YORK: Germany’s push for European fiscal prudence amid tepid growth and sovereign-debt burdens is “liable to send the euro zone into a deflationary spiral,” billionaire investor George Soros said.

German leaders have insisted on fiscal austerity measures in the euro zone while continuing to cut their own deficits as exports have led to the fastest economic growth since reunification. German gross domestic product grew at 9% in the second quarter and unemployment has continued to fall.

In May, the European Union's offered e750 billion ($1 trillion) rescue fund for Greece and other peripheral members of the region to help address concerns about sovereign default. The loan package imposed budget rules on distressed euro-area members. Governments in Spain, Italy and Portugal have all pledged to step up deficit-cutting efforts. However “deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learned from the Great Depression of the 1930s,” Soros said.