Europe is not prepared to boost spending beyond stimulus measures that have already been announced, even if it is requested to do so by the United States, Eurogroup head Jean-Claude Juncker said on Wednesday.
“The European stimulus plans are strong, they are demanding and they are significant in terms of volume and quality,” Juncker, who chairs the group representing finance ministers of the euro zone, told Europe 1 radio. “There is no question that, upon the demand of the United States, that we would increase it,” he said.
In an article published around the world on Tuesday, US President Barack Obama called on leading economies to enact robust stimulus spending, repair credit markets and extend aid to poor countries when Group of 20 leaders meet in London late next week.
Juncker, who is also prime minister of Luxembourg, said total spending on stimulus measures and assistance to the stricken banking sector amounted to around three percent of European gross domestic product.
The stimulus packages of European countries had been coordinated though perhaps not as much as they could have been, but there had been no blatant contradictions among member states, he said.
Juncker’s comments came as IMF chief economist Olivier Blanchard told French daily Les Echos that there was still room for countries to boost spending to combat the crisis and that countries like France could do more.
Governments should in theory be rolling out as many economic stimulus measures as possible while also respecting budgetary concerns over the medium term so as not to spook financial markets, Blanchard said.
Turning to the G20 meeting, Juncker said government leaders were obliged to come out with concrete steps and rules to ensure that no area within the financial sphere could evolve without surveillance.
European leaders had the mandate to tell the United States that while there should be economic stimulus, there should also be a new global financial framework, he said.
On prospects for global growth, Juncker said he envisaged a tentative recovery from around the end of 2010. “I think that the recovery will not return before the end of 2010 or the start of 2011, but the consequences of the crisis will be felt for many years,” said Juncker. (Reuters)