There is no obvious need for more fiscal stimulus in Europe in view of measures already foreseen in 2008 budgets, European Monetary Affairs Commissioner Joaquin Almunia was quoted on Monday as saying.
In an opinion piece published in French daily Le Figaro, he said the fundamentals of the European economy were "”good and solid. It is therefore, at this stage, not at all obvious that a further budgetary boost is necessary in Europe,” Almunia wrote, describing the steps already envisaged in 2008 budgets as “non-negligible.” “Let’s allow the budgetary stabilizers to take effect without compromising long-term consolidation,” he said. Almunia said a recession in the United States was not currently an issue. “There is no question yet of a recession in the United States, and even less so in Europe," he said, adding that European countries’ budget consolidation had put them in a good position to deal with a downturn. “On the whole, there has been a good budgetary consolidation effort in recent years, which enables us to face external shocks in a more serene manner,” he said. “A majority of EU countries are facing this deterioration in growth in a more comfortable situation than others,” he said, without singling out countries for praise or criticism. “These are the countries that have used growth since mid-2005 to progress towards balanced public finances,” he said.
Almunia has called on France to reduce its budget deficit faster, but French Prime Minister Francois Fillon has said he has no plan to change his economic plans. Finance ministers of the then 13-nation euro zone agreed last year to bring their budgets close to balance in 2010, but President Nicolas Sarkozy has since said France needed more time so as to shore up economic growth. France says it is now aiming to balance its budget by 2012. In an interview with Le Figaro newspaper on Monday, French Economy Minister Christine Lagarde said calls from International Monetary Fund Managing Director Dominique Strauss-Kahn for a coordinated stimulus plan “merit listening to.” She said it would not be realistic for the Eurogroup of euro-zone ministers to toughen its stance against France given the change in macroeconomic circumstances in the past year. “We will do everything we can to get to balance in 2010 but in the current situation we should not kid ourselves, it will be very difficult, independent from our willingness,” Lagarde was quoted as saying. (Reuters)