Chancellor Angela Merkel urged French President Francois Hollande to press ahead with economic reforms, while hinting he has flexibility in the pace of deficit reduction.

The German chancellor cited the risk to market confidence when governments “always” run deficits and the need to recognize “that higher spending doesn’t create growth,” her first comments on France since Hollande purged cabinet ministers who opposed spending cuts.

“We can talk about the question of whether you have a 2 percent deficit or 3 percent, or 1 percent, or a balanced budget like us,” Merkel said during a panel discussion with reporters in Berlin today. “What’s at issue in France is to really do those structural reforms. And the French president has announced them.”

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