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Lagarde urges Germany to increase spending, French economy grows

Lagarde urges Germany to increase spending

Christine Lagarde, the next European Central Bank President, has called on eurozone economies with large budget surplus to invest more to support economic growth.

Christine Lagarde told RTL on Wednesday that Germany and the Netherlands could use their budget surplus to boost growth in the 19-nation region.

Lagarde said countries with budget surpluses have not made the necessary efforts, and “I'm thinking clearly now about countries that have a budget surplus constantly so far."

The former IMF director believes they have room to move, wondering why countries like the Netherlands and Germany are not using their budget surplus in investing in infrastructure, education and innovation.

This month, Germany's finance minister Olaf Schulz rejected criticism of the government for not investing enough, and said Germany was not prepared to have debt levels.

Some EU member states prefer a conservative approach, relying primarily on current monetary policy, while, on the other hand, some ecoomies, including France, believe that increased investment is the solution.

France's economy grew more than expected in the third quarter of 0.3 percent, registering the same levels in the second quarter.

Data released by the national statistics authority on Wednesday showed that France's GDP rose by about 0.3 percent in the three months ending September on a quarterly basis, the same pace as the first and second quarters of this year.

Analysts had forecast that France's economy would grow 0.2 percent in the third quarter of 2019.On an annual basis, the French economy expanded by 1.2 percent.

Household consumption accelerated from July to September by about 0.3 percent, compared with 0.2 percent in the second quarter.

The data also confirmed that domestic demand remained the main driver of growth to the French economy, contributing with 0.5 percent of GDP growth.

French exports increased by 0.3 percent, compared with a 0.1 percent decline in the second quarter.

As of 09:43 GMT, the euro increased against the dollar by 0.05 percent to $1.1116, while against the British currency, it slumped 0.03 percent at 0.8630.

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