Stiri	Stiri afaceri	Stiri companii	Evenimente de afaceri

The international economic crisis deepens

While Economic and Monetary Affairs Commissioner Joaquin Almunia says EU must use all tools to limit slowdown, many factories already stop production. In Romania, Dacia stops the production until December, in Finland or Germany Telecom gear vendor Nokia Siemens Networks said it would slash around 1.820 jobs.

The European Union must use all means at its disposal, including monetary and fiscal policy, to limit the economic slowdown, Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday.

Emphasising the scope within EU rules for allowing higher government spending and deeper tax cuts at times of economic crisis, he said the 27-nation bloc should seek a concerted policy response to help boost the economy just as it did to restore confidence in the financial sector. "This means using all the policy instruments we have available to limit the slowdown, protect jobs and lay the ground for a sound recovery. The first tool is monetary policy," Almunia said in a prepared speech.

"The recent fall in inflation has opened the way to interest rate reductions to help sustain consumption and investment. The European Central Bank has already demonstrated its readiness to act with two cuts in the last weeks," he said.

The European Central Bank has cut interest rates by 100 basis points to 3.25 percent since October and economists expect more easing as they forecast the euro zone economy to be in recession next year. Budgetary policy should also cushion the slowdown, Almunia said. He noted that slower growth would inevitably increase budget deficits and that the emergency measures to support the banking sector were already having pushing up debt.

But he said the EU's budget rules, the Stability and Growth Pact, had enough inbuilt flexibility to manage the deterioration in public finances. "We invite member states to draw fully on the flexibility of the Pact," he said, but added fiscal policy should remain sustainable.The pact sets a limit on budget deficits of 3 percent of gross domestic product. If this limit is breached, EU ministers start disciplinary steps against the offending country which could end up in fines, although they never have so far. "The pact provides for specific treatment when ‘exceptional circumstances' exist," Almunia said. He reiterated that if the deficit rises above the 3 percent ceiling only temporarily and by a small amount the disciplinary steps need not be started.

 

Sursa: http://www.nineoclock.ro

Tags: policy economic limit almunia euro

Articole similare