German Finance Minister Wolfgang Schaeuble on Thursday defended Berlin's belt-tightening policy drive after European Commission President Jose Manuel Barroso hinted that focus on austerity has hit the limits of public acceptance.

Schaeuble said on Thursday in a radio program that Germany strongly advocated making efforts to reduce budget deficits a top priority, adding that Europe could not spend its way out of its economic problems.

The minister warned that countries that start to run up more debt would face the misery again.

On Wednesday, German Foreign Minister Guido Westerwelle also said giving up the policy of tightening the budgets would lead to new debts and more unemployment in Europe for many years, adding that fiscal consolidation and growth were complimentary.

Berlin's rebuttal came after Barroso, the head of the EU's executive arm, said earlier this week that the policy that was only seen as austerity was not sustainable and had hit the limits of public acceptance.

Also on Wednesday, German Chancellor Angela Merkel struggled to contain her frustration when asked at a conference whether southern European countries could take any further austerity measures, saying that she called the policy balancing the budget.

"Everyone else is using this term austerity, that makes it sound like something truly evil,' Merkel said.

Norbert Barthle, budget spokesman of Merkel's Christian Democratic Union's (CDU), said that allowing greater leeway on debt would damage the credibility of the EU.

Turning away from the course of budget consolidation in Europe would be a disastrous signal that "we don't mean it seriously with our reform efforts," he told local media.

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