Since then, weakness in key euro area trading partners has begun hitting German exports and a deepening Ukraine crisis has unnerved businesses, which are postponing investments.

Last week, manufacturing orders, industrial output and exports in quick succession suffered their steepest one-month falls since early 2009, when the German economy was reeling from the after-effects of the Lehman Brothers bankruptcy and entering its deepest recession of the post-war era.

No one expects such a precipitous fall this time. But after a 0.2 percent contraction in the second quarter, Germany risks falling into a technical recession in the third quarter.
If the weakness continues into the final months of the year, the government's ambitious budget goal will look even more out of touch with economic reality, and the pressure to loosen the purse strings and invest more public money will grow.

This week, Berlin is expected to cut its growth forecasts for this year and next to 1.2 percent.

In Washington, International Monetary Fund chief Christine Lagarde and European Central Bank president Mario Draghi were relatively polite in nudging Germany to adopt a more flexible approach, while Summers was typically blunt.

"What's happening in Europe is not working," he said, sitting alongside a frowning Schaeuble. "The monolithic focus on the financial deficit to the exclusion of the investment deficit, which causes a growth deficit, has been a very substantial error."

Schaeuble responded that "writing checks" was no way to boost the European economy. He rejected the idea that Germany was headed towards recession and put the onus firmly on France and Italy, urging them to press ahead with long overdue reforms.

Until now, Schaeuble and Merkel have spoken only about the need to encourage more private investment, for example by cutting red tape for businesses.

This has also been the focus of a panel of experts set up by Economy Minister Sigmar Gabriel, which is due to meet for a second brainstorming session later this month.

But over the weekend, Ulrich Grillo, the influential president of Germany's BDI industry federation, joined the skeptics in Washington in pressing Merkel to go further and present an action plan for public investment.