The EU will avoid slipping into recession and is doing all it can to tackle the region’s debt problems, a top official said yesterday
European Commission President Jose Manuel Barroso, who is in Australia on his way to a meeting of South Pacific states, said the 27-nation EU and the euro common currency are resilient and the region will continue to grow, albeit modestly.
“We don’t anticipate a recession in Europe,” Barroso told reporters after a meeting with Australian Prime Minister Julia Gillard and senior ministers. “The latest forecast by the European Commission shows that there will be growth — modest growth, it’s true.”
“The European Union and euro are strong and resilient and we are doing all it takes from tackling the underlying budget problems to strengthening the governance of the euro zone, from tighter financial regulation to improving our overall competitiveness,” he said.
Disagreements over Greece’s massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens last week, as Greek Finance Minister Evangelos Venizelos warned an even deeper recession in his country will hurt its deficit-cutting efforts.
The unexpected departure on Friday of the debt inspectors — officials from the European Commission, the European Central Bank and the IMF — marked yet another occasion of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.
However, Barroso, who heads the EU’s executive arm, said it would be premature to make an assessment now on the Greek government’s latest efforts to tackle debt.
Greece’s troubles are being worsened by a slowing global economy, with growth tapering off in major economies such as Germany, China and the US.
World business leaders and finance experts gathered in Italy for the annual Ambrosetti Forum at the weekend offered a downbeat assessment of the global economy — with several predicting another recession due to a calamitous cocktail of sluggish growth, eurozone dysfunction, and financial market volatility.
The Australian government has criticized a lack of political will in Europe to tackle serious economic reform. Australian Deputy Prime Minister Wayne Swan co-wrote an article published in the Financial Times newspaper last month that said a crisis in confidence in policy makers posed a greater challenge than any economic barrier. However, Gillard yesterday praised Europe’s efforts to tackle its sovereign debt crisis.
“Australia certainly welcomes the important steps European authorities have taken to address sovereign debt problems and to press on with reform,” she told reporters.
“We know and understand these are difficult decisions, but we know that tough decisions are needed to stabilize financial markets,” she said.
Yet Gillard said she was “not on the same page” with Barroso on the need for a financial transactions tax on the European banking industry. The proposal will be put to a summit of the G20 in Cannes, France, in November.
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