Angela Merkel attacked by homegrown critics for preaching austerity to Europe while Germany goes on a spending spree

Angela Merkel: The German Chancellor has firmly contested a fresh write-off of Greece’s debt (AFP)

Chancellor Angela Merkel’s meeting with David Cameron was overshadowed by fierce criticism of her government’s policies in Germany, where she stands accused of preaching austerity for the rest of Europe while going on a spending spree at home.

Ms Merkel’s coalition of conservatives and liberal Free Democrats has increased allowances for pensioners, axed fees at doctors’ surgeries, introduced a controversial €100 a month payment for stay at home mothers and upped the transport budget by €750 million.

The measures costing a total of €3bn were agreed earlier this week and were an attempt to iron out policy differences between the coalition parties and woo voters in the run up to next year’s German general election.

However, a growing number of critics have since bitterly attacked the spending programme. Sigmar Gabriel, the leader of Germany’s opposition Social Democrats has accused Ms Merkel of “preaching austerity for the rest of Europe while enjoying wine at home.”

The head of Germany’s influential Employer’s Association, Dieter Hundt stepped up the criticism and accused the Merkel government of being two faced and not serious about saving: “The coalition’s commitment to consolidating the state’s finances and cutting debts will only be credible if it stops simultaneously inventing new spending programmes,” he told Die Welt newspaper.

Ms Merkel’s coalition has pledged to present a balanced budget by 2014 - assuming it is re-elected. It plans to cut borrowing from €13.1bn to €6.8bn. However, it remains unclear whether the additional savings will come from.

The German edition of the Financial Times accused Ms Merkel’s government of displaying “the kind of short-sightedness that Berlin accuses other European countries of exhibiting.” It added: “The German government should have learned one thing from Greece: Good luck comes to an end.”

The latest German opinion poll puts the country’s opposition Social Democrats and Greens once percentage point ahead of Ms Merkels’ coalition parties.