Friday

20th Apr 2018

Europe needs new stimulus to ward off crisis, US treasury warns

European governments need to "boost demand" in order to reduce unemployment and avoid deflation, the US Treasury secretary has told the G20 group.

Speaking after the meeting of G20 finance ministers and central bank governors in Australia on Sunday (21 September), Treasury secretary Jack Lew said that there was "an intensified call for boosting domestic demand in Europe".

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • EU needs new economic stimulus measures, says US treasury secretary Jack Lew (r) (Photo: Joerg Rueger/German ministry of finance)

He added that EU governments needed to combine short-term stimulus measures with structural reforms to their economies.

"The combination of taking action to boost demand in the short run and make structural changes for the long run is an important combination, and it shouldn't become a choice between the two," he said.

The US has made it clear throughout the eurozone crisis that the main priority of European governments should be boosting demand in their fragile economies.

"The concern that I have is that if the efforts to boost demand are deferred for too long," said Lew, adding that "there is a risk that the headwinds get stronger, and what I think Europe needs is more tailwinds in the economy."

Earlier this month, the European Central Bank voted to cut interest rates to a historic low of 0.05 percent and unveiled a raft of bond-buying programmes in a bid to stimulate lending to businesses.

However, it has so far fallen short of launching a quantitative easing programme of government bond-buying similar to that introduced by the US Federal Reserve in the wake of the financial crisis.

The eurozone economy flat-lined in the second three months of this year and this, combined with an inflation rate that hit a new low of 0.3 percent in August, has increased fears of prolonged economic stagnation. The eurozone economy is now forecast to expand by a mere 0.9 percent this year.

But governments remain divided. A group of ministers led by Germany's Wolfgang Schuaeble maintain that governments should focus on cutting budget deficits, while the centre-left governments in France and Italy want to be given more leeway for public investment programmes.

For his part, European Central Bank president Mario Draghi has insisted that governments should not rely on the bank to provide all the stimulus measures needed to drive economic demand.

Earlier on Sunday, G20 ministers agreed on new measures to tackle corporate tax avoidance. Joe Hockey, Australia's treasury minister, who hosted the meeting, said that governments had agreed to automatic exchange of information using a Common Reporting Standard.

EU needs to invest, IMF warns on eve of jobs summit

The eurozone and Japanese are the economies most vulnerable to a protracted period of stagnation and need to increase public investment, the International Monetary Fund (IMF) has warned.

Analysis

New EU party finance rules short circuit accountability

The EU's latest funding rules for European political parties and their think tanks fails to address the underlying problems of abuse. Instead of tackling the loans and donations culture, it has simply made access to EU funds a lot easier.

Analysis

New EU party finance rules short circuit accountability

The EU's latest funding rules for European political parties and their think tanks fails to address the underlying problems of abuse. Instead of tackling the loans and donations culture, it has simply made access to EU funds a lot easier.

Getting secret EU trilogue documents: a case study

On Thursday, the European Parliament will vote on a political deal on organic farming, following 19 months of behind-closed-doors negotiations. EUobserver here details a five-month odyssey to get access to the secret documents that led to the deal.

News in Brief

  1. MEPs urge better protection for journalists
  2. Dieselgate: MEPs back greater role for EU in car approvals
  3. European parliament adopts new organic farming rules
  4. EU granted protection to half million people in 2017
  5. Report: Facebook to carve 1.5bn users out of EU privacy law
  6. Greek court ruling permits migrants to travel to mainland
  7. Commonwealth summit hopes for trade boost after Brexit
  8. Merkel and Macron meet to finetune eurozone reform plans

Stakeholders' Highlights

  1. ILGA EuropeParabéNs! Portugal Votes to Respect the Rights of Trans and Intersex People
  2. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  3. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  4. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  5. UNICEFCalls for the Protection of Children in the Gaza Strip
  6. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  7. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  8. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  9. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  10. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  11. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia
  12. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector

Latest News

  1. Obscurity surrounds EU military fund's expert groups
  2. New EU party finance rules short circuit accountability
  3. Draghi to stay in secretive 'lobby' group
  4. Bulgaria offers lesson in tackling radical-right populists
  5. Getting secret EU trilogue documents: a case study
  6. Selmayr case scars Parliament and Commission
  7. Beyond macho: Turkish-EU ties
  8. 'Flobert' guns - Europe's latest terror loophole