— Concerned About U.S. Fiscal Consolidation Efforts
TOKYO (MNI) – Eurozone adjustment efforts, including fiscal
austerity, must continue, European Central Bank Executive Board member
Peter Praet said at the International Institute of Finance’s 30th
Anniversary Membership Meeting here on Friday.
“There has been a lot of talk about this lost decade for the
European economies and the Eurozone in particular. I would rather talk
about the decade of adjustment,” Praet said.
“It is very painful, it is necessary and it is long overdue and it
is underway,” he asserted. “Of course there are a lot of uncertainties
in this process given the challenges, but the direction is very clear.”
In terms of fiscal adjustments, “the biggest effort will be done in
2012 and a little bit in 2013,” Praet said. “We don’t think it is
counterproductive. We believe these are things that are essential. We
can discuss a little bit about the timing — is it smooth, is it too
much frontloaded? — but these are essential things to do.”
Earlier this week, a new International Monetary Fund analysis
suggested that fiscal austerity among Europe’s periphery was doing more
damage to growth than previously assumed.
Praet went on to suggest the United States was not doing enough to
bring its fiscal house in order.
“And it is true that from our side there is concern about the
fiscal consolation efforts in the U.S.,” Praet said.
Praet noted that a speech by Mario Draghi in July — in which the
ECB president said the central bank would do what was necessary to
ensure the survival of the Eurozone and so there was no question of the
single currency’s survival — had further unleashed reform efforts and
supported investor confidence.
“The signal was very clear about the risks of redenomination in the
Eurozone. I think the signal was very clear that this cannot be and that
mobilized a number of forces ”
–Frankfurt bureau tel.: +49-69-720 142 Email: jtreeck@mni-new.com
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