Eurozone live: Angela Merkel warns crisis is ‘far from over’
German chancellor Angela Merkel poses for photographs after recording her annual new year’s speech at the Chancellery in Berlin yesterday. Photograph: POOL/REUTERS
Angela Merkel: 2013 will be harder
Photograph: John MacDougall/POOL/EPA
Good morning, and welcome to our final day of rolling coverage of the eurozone debt crisis, and other key events in the world economy, for 2012.
We’re ending the year with a solemn warning from Angela Merkel that the crisis has not run its course, despite the waves of optimism that have swept some parts of Europe in recent months.
In her new year message, the German chancellor warned that 2013 will be challenging , saying:
I know that many are also heading into the new year with trepidation. And indeed, the economic environment next year will not be easier, but more difficult. That should not discourage us, but – on the contrary – serve as an incentive.
And on the eurozone crisis, she was adamant that more work must be done, despite the progress made this year:
The European sovereign debt crisis shows us how important this balance is. The reforms we have agreed to are beginning to take effect. But we still need a lot of patience. The crisis is far from over.
More needs to be done internationally, as well, to monitor the financial markets. The world has not sufficiently learned the lesson of the devastating financial crisis of 2008. For never again must such irresponsibility be allowed to take hold as it did then. In the social market economy, the state is the guardian of order, and the public must be able to place its trust in it.
The full text is online, in English, here.
Photograph: John MacDougall/POOL/EPA
The comments are more downbeat than we’ve heard from other senior politicians and officials in recent weeks. Just last Thursday her finance minister, Wolfgang Schäuble, declared that ‘the worst is over’ for the eurocrisis.
But with the eurozone struggling to return to growth, and public anger against austerity unabated, it’s clear that 2013 will indeed be tough.
I’ll be tracking reaction to Merkel’s new year message in the blog, along with other key developments as a historic year for Europe draws to a close…..
Updated at 8.20am GMT
What are your predictions for 2013, and memories of 2012?
As it’s the final live blog of 2012, we’re particularly keen to hear your predictions for 2013.
Is Merkel too pessimistic about next year, or is the chancellor simply talking sense?
Was Mario Draghi the real hero of 2012, and who were the villains?
And what else should we take away from the last 12 months of elections, summits, deals and brinkmanship, which ended with the eurozone in recession but the EU clutching the Nobel Peace prize?
Reaction to Merkel’s Message
This is Angela Merkel’s final new year address before she faces the voters in a general election (scheduled for autumn 2013).
Her call for a renewed crackdown on “irresponsibility” in the financial markets may play well with the German electorate. Her main rival, the SPD’s Peer Steinbrück, has said he would make sweeping changes if elected.
As Reuters put it:
Political analysts believe Merkel nevertheless still has the most options to form a government after the vote. She could lead a right-left grand coalition with the SPD as she did from 2005 to 2009 or a coalition with the pro-environment Greens party.
Merkel said she hoped there would be more controls next year on international financial markets – a popular issue in Germany that the SPD is planning to make a central plank of its 2013 election campaign.
While AFP says Merkel is ‘steeling’ Germans for a difficult year, pointing out:
Although top exporter Germany has managed to hold up to the crisis fairly well, growth has slowed here as well since the beginning of the year.
After expanding by 0.5 percent in the first quarter of 2012, gross domestic product (GDP) grew by just 0.3 percent in the second quarter and a mere 0.2 percent in the third quarter.
And in October, the government slashed its forecast for economic output next year to 1.0 percent, compared to 1.6 percent previously anticipated.