German Finance Minister Peer Steinbrueck yesterday rejected the idea of a European stimulus plan to revitalize the economy, as EU finance chiefs gathered to map out a way to avert a recession.
“I think there is no need for a European stimulus package. Every country is responsible for itself ... It makes no sense to burn money,” he told reporters in Nice.
RECESSION FEARS
The two-day meeting of finance ministers and central bankers on the French Riviera comes amid growing fears that the European economy is headed for a recession.
The European Commission estimated on Wednesday that Europe was teetering on the brink of a technical recession, which economists define as two consecutive quarters of contraction.
After the 15-nation euro-zone economy contracted 0.2 percent in the second quarter, the EU’s executive arm estimated that it would be at a standstill in the third quarter.
TAKING ACTION
Unlike other global economic heavyweights, Europe has few options for tackling the growing crisis.
Ever vigilant about inflation, the European Central Bank is unlikely to give a boost to the economy by cutting interest rates until at least next year, economists said.
On the fiscal front, few European countries have budgets strong enough to allow for major tax relief or spending programs such as in the US and Japan without breaking the EU’s strict public deficit rules.
HEALTHY GERMANY
Among the major euro-zone economies, only Germany has healthy public finances, but Steinbrueck has repeatedly refused to loosen up fiscal discipline even though the commission estimates that Europe’s biggest economy is already in recession.
Steinbrueck disputed Brussels’ prognosis, telling journalists: “I think we are not facing in Germany recession, [but] we are facing a lot of slowdown risk undoubtedly.”
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