By Simon Miller

The German chancellor Angela Merkel has called for political courage in an interview published the day after millions took to the streets to protest about austerity measures.

In an interview with German newspaper Abendblatt, Merkel said it was important to reject the idea that growth must cost more money as the result would simply be expensive economic stimulus programmes.

She told the paper that sustainable growth was based more on education and research and the potential of small to medium enterprises based on innovation and the opening of the labour markets,.

“Employment can only be created and youth unemployment can only be reduced if we mower the barriers to the recruitment of young people and improve vocational training,” she commented.

Merkel continued: “These are all activities for which one needs more political courage and creativity than just billions of euros.”

In the interview, Merkel appeared to soften Berlin’s stance to pumping more money into the eurozone, saying that Europe was planning more flexible use of structural funds to allow SMEs better access to credit.

In addition, she commented: “The federal government would also be willing to strengthen the European Investment Bank so that it can provide more support.”

Merkel also fired a warning shot across French election favour Francois Hollande who has said he would revisit the fiscal pact saying that sound finances was the one of the two pillars that would get the Eurozone out of its crisis.

She rejected the idea that the fiscal pact could be softened, and added: “The fiscal pact is one of our most important means to ensure sound and disciplined future budgets. With 25 out of 27 EU member states signing, we have a cross-party consensus which expresses our common understanding that there should not be an ever-growing mountain of debt for future generations.”

Merkel added: “The confidence that Europe wants to win in the world depends on our reliability on this issue.”

The interview, published today, comes after trade unions, public sector workers and the unemployed marched against the spending cuts across the eurozone.

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