THE EUROPEAN UNION will avoid slipping into recession, and is doing all it can to tackle the region’s debt problems, the head of the European Commission has insisted.
Jose Manuel Barroso said both the EU and the euro were resilient, and that the regional economy would continue to grow, albeit at a slower rate than had been hoped.
“We don’t anticipate a recession in Europe,” Barroso told reporters after a meeting with Australian prime minister Julia Gillard and senior ministers. “The latest forecast by the European Commission shows that there will be growth – modest growth, it’s true.
“The European Union and euro are strong and resilient and we are doing all it takes from tackling the underlying budget problems to strengthening the governance of the euro zone, from tighter financial regulation to improving our overall competitiveness,” he said.
Disagreements over Greece’s massive budget deficits, and how to make up for the funding shortfalls, led international debt inspectors to suspend their review and leave Athens last week, while Greek finance minister Evangelos Venizelos warned that a deeper recession would damage Greece’s ability to attack its government deficit.
The unexpected departure of the debt inspectors - including officials from the EU, ECB and IMF – marked yet another occasion of conflict between international institutions, who demand greater reform efforts, and a government and country that are reaching their limits.
But Barroso, who heads the EU’s executive arm, said it would be premature to make an assessment now on the Greek government’s latest efforts to tackle debt.
Greece’s troubles are being worsened by a slowing global economy, with growth tapering off in major economies such as Germany, China and the United States.
The Australian government has criticised a lack of political will in Europe to tackle serious economic reform. Gillard’s deputy prime minister Wayne Swan co-wrote an article published in the Financial Times newspaper last month, which said a crisis in confidence in policy makers posed a greater challenge than any economic barrier.
But Gillard today praised Europe’s efforts to tackle its sovereign debt crisis. ”Australia certainly welcomes the important steps European authorities have taken to address sovereign debt problems and to press on with reform,” she told reporters.
“We know and understand these are difficult decisions, but we know that tough decisions are needed to stabilise financial markets,” she said.
Barroso is traveling to Auckland, New Zealand, to attend an annual South Pacific leaders’ forum this week.
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