While immediate market tensions have mostly passed, the sovereign debt crisis continues to be a challenge in Europe and fiscal consolidation is an "important long-term project,” said Axel Weber, president of the Deutsche Bundesbank.
“Seeing that the economies have stabilized and are now growing again, it’s time to put fiscal consolidation on top of the political agendas in most of our economies,” Weber told CNBC at the annual Fed symposium in Jackson Hole, Wyoming.
Weber stressed the importance of placing incentives for fiscal consolidation and fiscal prudence within various countries.
“Relying on each other as a crisis measure can be detrimental to the long-term sustainability of fiscal positions,” he said.
Germany's economy grew 2.2 percent in the second quarter, the fastest rate since reunification, as companies stepped up investment and exports surged.
“But it just didn’t come from exports—it came more strongly from domestic economy and consumption was kicking in,” Weber said of the nation’s recent GDP report. “So we are bordering on a self-sustaining recovery in Europe and there’s not much concern for renewed recession.”
Weber also noted that Germany’s labor market performance has been better compared with most others around the world.
“When the economy fell by 4.7 percent last year, unemployment only moved up marginally and it’s falling again already,” he said. “We expect unemployment in Germany to be around 7 percent going forward and falling continuously further.”