German Finance Minister Wolfgang Schaeuble put on a brave face at the end of IMF meetings in Washington this weekend, dismissing suggestions that Berlin had come under pressure to shift its economic course as "spin doctoring."

But the reality is that Germany hasn't looked this isolated over its policy prescriptions for Europe since the height of the euro zone financial crisis more than two years ago.

In Washington, Schaeuble not only endured lectures from longtime critics such as Larry Summers, the former U.S. Treasury Secretary who in an unusually frank panel discussion accused Germany of leading Europe down a path of Japanese-style deflation with a misguided focus on budget consolidation.

He also had to listen to advice from traditional allies such as Finland's Jyrki Katainen, a future vice president of the European Commission, who warned that Germany could not remain strong forever if it failed to invest more in its own infrastructure and education system.

The criticism did not go unnoticed in Germany, where the media has so far been supportive of Berlin's drive for a balanced budget, its rejection of stimulus and its insistence that partners such as France and Italy press ahead with painful structural reforms despite slowing economies.

In its lead editorial on Sunday, conservative newspaper Die Welt argued that a weakening German economy should force a policy rethink and warned that Schaeuble's push to achieve a "schwarze Null"––a federal budget that is in the black––in 2015 should not turn into a mindless "fetish."

The Sueddeutsche Zeitung suggested Chancellor Angela Merkel's Christian Democrats (CDU) risked turning into the "Tea Party of Europe" with their single-minded focus on deficit reduction.

Guntram Wolff, head of the Brussels-based Bruegel think tank, said he believed the economic case for running a small deficit in Germany was "very compelling," although he played down the prospects of Berlin abandoning its balanced budget goal in a public way anytime soon.

"I do think the political preference for a balanced budget will become weaker as the economy deteriorates, but the shift will happen in a silent way," he told Reuters.

Back in February, when Merkel's new "grand coalition" government presented a report on the economic outlook for 2014, it described Germany as being in the midst of a "stable, broad-based recovery." Gross domestic product (GDP) was forecast to rise by 1.8 percent this year and by 2.0 percent next.

First « 1 2 3 » Next