PARIS (MNI) – Industrialized countries across the globe should
embark immediately on fiscal tightening, including spending cuts and tax
increases, as signs of a healthy economic recovery grow, European
Central Bank President Jean-Claude Trichet said in an opinion piece to
be published in the Financial Times.
Trichet argues that those who want to prolong the stimulus measures
introduced during the height of the financial crisis are wrong and that
cutting public borrowing would have only a “very limited” effect on
growth, the newspaper reported in an article on its website describing
Trichet’s opinion piece. Trichet’s full piece has not yet appeared on
the site.
Trichet seems to be targeting the U.S. and the International
Monetary Fund in his criticism of a headlong global rush into budgetary
stimulus last year, the FT said.
“With the benefit of hindsight, we see how unfortunate was the
oversimplified message of fiscal stimulus given to all industrial
economies under the motto: stimulate, activate, spend,” the ECB chief
said. He argued that, “we must avoid an asymmetry between bold, if
justified, loosening and unduly hesitant retrenchment.”
Trichet’s views are starkly at odds with those of U.S. Federal
Reserve Chairman Ben Bernanke, who just this week aired a somewhat
pessimistic view of the economy and argued that stimulative policies
should be maintained for now.
–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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