German trade group fears 'erosion' of Europe, slams France and ECB

BERLIN (Reuters) - Germany's BGA trade federation criticized euro zone countries including France on Tuesday for failing to reform their economies, saying this was opening the door to populists and leading to an "internal erosion of Europe".

The BGA, which speaks for the German wholesale, foreign trade and service sectors, also reiterated its warnings about the loose monetary policy of the European Central Bank, accusing the bank of "damaging the foundations of our currency and trust in the euro".

"The influx of refugees and the threat from terrorism are huge challenges," BGA President Anton Boerner said in a statement. "But in my view the biggest danger is the unwillingness and inability of Europe to address the root causes of the euro zone debt crisis."

Boerner singled out France, saying much-needed structural reforms had been neglected by Paris for years, leading to an overly indebted economy that was struggling to generate growth.

"The creeping de-industrialization and associated high unemployment (in France) is fuelling populists on the right and left," Boerner said.

The BGA said it expected German gross domestic product (GDP) to rise by 1.25 percent this year, well below the government's forecast for an expansion of 1.8 percent.

A survey of its members showed that 70 percent believed the arrival of hundreds of thousands of refugees to Germany was an opportunity for the country, although 62 percent were concerned that costs associated with the influx would endanger Germany's balanced budget.

Boerner described China as a "risk factor" for the stability of the global economy, adding that a hard landing there would threaten to push Germany into recession.

He hoped stock market falls on Monday after weak Chinese economic data were a one-off but added that it was clear "that the Chinese do not have the problems under control."

(Reporting by Gernot Heller; Writing by Noah Barkin; Editing by Paul Carrel)

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