Sunday

27th Nov 2022

Barroso: EU austerity has 'reached its limits'

European Commission chief Jose Manuel Barroso on Monday (22 April) indicated that the EU's budget-slashing response to the economic crisis has run its course.

Speaking in Brussels at a meeting of European think tanks, Barroso commented that "while I think this policy [austerity] is fundamentally right, I think it has reached its limits."

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In a reference to rising public discontent at the severity of spending cuts and tax rises, he noted that "a policy to be successful not only has to be properly designed, it has to have a minimum of political and social support."

"We have to have tailor-made solutions for each country, we cannot apply a one size fits all programme to the European countries," he added.

Barroso's remarks are a further sign that Brussels is ready to give the likes of France, Spain and Italy more time to force through unpopular economic reforms to reduce their budget deficits.

For his part, speaking at the same event, EU Council President Herman Van Rompuy conceded the economic crisis is "lasting too long.

He added that "patience is understandably wearing thin and a renewed sense of urgency is setting in."

He underlined the need to "move faster on the reforms with the biggest immediate growth impact."

The statements come just a week before the release of the commission's spring economic forecasts.

The forecasts are expected to make grim reading, especially for countries on the Mediterranean rim, which have been among the worst hit by the eurozone's economic crisis.

Meanwhile, figures released on Monday by EU statistics agency Eurostat confirmed a slight fall of budget deficits in the eurozone to an average of 3.7 percent in 2012.

Germany, whose Chancellor, Angela Merkel has been the main driver of spending cuts and labour market reforms, was the only country to record a budget surplus.

Ireland, cited last week by Eurogroup chairman Jeroen Dijsselbloem as a model pupil, was the only one out of the four bailout EU countries to cut its deficit.

Portugal and Spain saw their deficits swell to 6.4 percent and 10.6 percent of GDP, respectively, while Greece' deficit rose to 10 percent.

The ongoing recession also forced up average EU government debt levels to 90.6 percent, well above the 60 percent threshold set out in the EU's Stability and Growth Pact.

Although governments across the bloc are moving towards balanced budgets, the European economy is expected to remain in recession until the final months of 2013.

MEPs slam Rehn over economic policy

EU economic affairs commissioner Olli Rehn faced a sustained verbal shellacking on Thursday from MEPs on the left and right.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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