Lagarde: Germany could invest more to drive growth

[October 30, 2019]  PARIS (Reuters) - Christine Lagarde, the incoming president of the European Central Bank, said on Wednesday euro zone countries with large budget surpluses should invest more to boost economic growth.

In an interview with France's RTL broadcaster days before she takes up her post, Lagarde singled out Germany and the Netherlands as countries that could deploy their surpluses to help growth.

"Countries, in particular those with the budget space, have not really made the necessary efforts, and I'm thinking obviously of countries that are in persistent budget surplus right now, the Netherlands, Germany and a certain number of others in the world," Lagarde said.

"Those that have the room for manoeuvre, those that have a budget surplus, that's to say Germany, the Netherlands, why not use that budget surplus and invest in infra-structure? ... Why not invest in education, why not invest in innovation, to allow for a better re-balancing?"

There is disagreement within the euro zone, reflected inside the ECB, over how best to revive economic growth, which is still sluggish a decade after the global financial crisis, while other major economies have bounced back.

Some in the euro zone favour a conservative approach, relying primarily on the current monetary policy. Others, including Lagarde's native France, believe an increase in investment is the answer.

(Reporting by Benoit Van Overstraeten; writing by Christian Lowe; editing by Jon Boyle, Larry King)

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