Merkel signals leeway on EU budget rules, insists on Juncker

Germany's Angela Merkel signalled her readiness on Wednesday to give EU states more flexibility within current budget rules to promote growth and job creation, but made clear she will push her choice of European Commission chief over British objections.
   
The chancellor appeared to come down clearly on the side of a more lenient interpretation of the European Union's Stability and Growth Pact to help countries like Italy and France balance the push for reform with the need to reduce high unemployment.
   
"The German government agrees that the Stability and Growth Pact offers excellent conditions for that, with clear guard rails and limits on the one hand and a lot of instruments allowing flexibility on the other," she told German parliament.
   
"We must use both just as they have been used in the past," Merkel said in the Bundestag one day ahead of an EU summit.
   
Italian Prime Minister Matteo Renzi is leading calls for a change of course in EU policy to promote public investment, cut record joblessness and help economies brought to their knees by the euro zone debt crisis.
   
Germany came through the crisis unscathed with record high employment rates, Merkel told the Bundestag. Her Social Democrat coalition partners have joined France and Italy in calling for  flexibility but share her reluctance to rewrite the rulebook.
   
Others in Germany, including the Bundesbank, warn of the  dangers of the EU dropping its guard on rules that limit budget deficits to 3 percent of gross domestic product and impose a strict timetable for states to reduce their public debt.
   
The head of Germany's influential BGA exporters' association Anton Boerner said easing the rules would...