Eurozone resists US push for more economic stimulus

Monday, March 9, 2009 at 9:58 PM Posted by Beijing News


The 16 countries using the euro rejected US pressure on Monday to plough more taxpayer money into their economies to revive global demand, exposing a transatlantic rift on how to tackle the deepening recession.

The emerging row is fuelling tensions between Europe and the United States as leading economic powers prepare for a G20 summit in London on April 2, which is supposed to coordinate a global response to the crisis.

US officials have said they would press for additional economic stimulus measures to be undertaken at the summit in stark contrast to reluctance in Europe to doing more at this point.

"We agreed that the recent US calls on Europe for an additional budgetary effort do not suit us," Luxembourg Finance Minister Jean-Claude Juncker said after chairing a meeting with his eurozone counterparts in Brussels.

Interviewed in Monday's Financial Times, Obama's top economic advisor Larry Summers urged world leaders to focus on boosting world demand ahead of the G20 summit.

Summers, who heads the White House's National Economic Council, said there was a need for "extraordinary public action" and urged leaders to take coordinated steps to pump more money into the global economy.

In a weekend interview with the New York Times, Obama meanwhile said that regions like Europe also needed to deal with structural "weaknesses" which were "actually greater than some of the weaknesses here."

German Finance Minister Peer Steinbrueck, who already resisted previous stimulus efforts, resisted the US pressure, stressing: "We're not planning on any additional measures.

"We should concentrate on measures that have already been decided."

Germany has planned this year a package worth 50 billion euros 63 billion dollars to revive Europe's biggest economy on top of 31 billion euros that it already began releasing last year.

The United States is banking on a 787-billion-dollar 623-billion-euro stimulus plan to drag the world's biggest economy out of its deepest recession in decades.

Meanwhile, the 27-nation European Union have committed to economic stimulus measures in 2009 and 2010 worth only 400 billion euros, equivalent to 3.3 percent of the bloc's gross domestic product.

The figure includes both national and EU level stimulus measures as well as automatic increases in social spending, such as unemployment benefits, which kick in when the economy weakens.

"We are not ready to increase the economic stimulus packages that we have already put together," Juncker told journalists.

"We do not want to give the impression that we are thinking of putting together new economic packages. We have done what we needed to do."

Despite resistance in Europe to spending more taxpayer money on reviving growth, European economies are looking increasingly enfeebled, with recovery hopes getting pushed back from the second half of 2009 to 2010.

"The recovery will take longer than we were expecting only a few months ago," EU Economic Affairs Commissioner Joaquin Almunia acknowledged.

"We'll present a new forecast in May but taking into account the downside risks that have appeared and started to materialise after we presented the January forecasts, I tend to think that this scenario or gradual recovery will be postponed to 2010," Almunia said.





Kasahara

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)