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Business Europe

EU leaders roundly oppose more bailout money

©

Video by Oliver FARRY

Latest update : 2009-03-20

At a two-day summit in Brussels, EU leaders spoke out against providing additional taxpayer funds for bailouts. EC head Jose Manuel Barroso rejected US and other criticism that Europe was not reacting sufficiently to the economic crisis.

AFP - EU leaders rebuffed mounting calls for a big new injection of taxpayer money into their ailing economies on Thursday as frustration grows over their response to the global financial crisis.
   
Despite US and increasing domestic pressure to do more to tackle the worst global slump in decades, several leaders insisted that Europe was already doing more than its fair share as the two-day summit in Brussels got under way.
   
With an estimated 4.5 million jobs in Europe under threat this year, public anger is beginning to bubble over, with a million French civil servants on strike Thursday in protest the government's handling of the crisis.
   
Washington has also pressed its European allies in the run-up to the Group of 20 major economies meeting in London next month to play a bigger role in reviving global demand by doing more to prop up their own faltering economies.
   
In reaction to such pressure, Dutch Prime Minister Jan Balkenende said that he did "not understand criticism that Europe isn't doing enough because we did a lot."
   
Likewise, Swedish Prime Minister Frederik Reinfeldt said "we have already done a lot" to revive economic activity and many governments had no room to do more given the strained state of their public finances.
   
"A huge number of member states are now in excessive deficits, that creates problems now and for the future," Reinfeldt said.
   
The 27-nation European Union has already committed to economic stimulus measures in 2009 and 2010 worth 400 billion euros, equivalent to 3.3 percent of the bloc's gross domestic product.
   
The figure is made up mostly of national stimulus measures and automatic increases in social spending, such as unemployment benefits, which kick in when the economy weakens.
   
Highlighting the depth of the recession in Europe, the International Monetary Fund estimated that the 16 nations using the euro would see their combined economy shrink 3.2 percent this year, much more than previously expected.
   
While not signalling out Europe specifically, the IMF warned that responses to the crisis were still in "an early stage" and that "measures are still needed to restore financial stability."
   
However, European leaders want to focus on rolling out planned recovery packages before considering any new, costly measures despite the increasingly dire economic outlook.
   
"Instead of anticipating the next (recovery) plan, let's implement the plan we've agreed," European Commission chief Jose Manuel Barroso said ahead of the summit.
   
"Let's not be ashamed all the time of what we have in Europe (when) in fact in matters of social economy we are much stronger than any part of the world, America or Asia," he said.
   
EU leaders were meeting to hammer out a joint European position for the G20 London summit on April 2.
   
There have been differences over how to spend billions of euros in EU funds for fighting the crisis and how much money should be made available to struggling eastern European members of the 27-nation bloc.
   
EU countries have been wrangling for months over five billion euros that are supposed to be used mainly for cross-border infrastructure projects.
   
EU unity could also be tested over how much money should be made available to eastern European countries that are struggling to cope with crisis.
   
The leaders are supposed to consider making a further 10 billion euros in emergency loans available to non-eurozone members because Hungary and Latvia have already drawn down nearly that much from a 25-billion-euro emergency credit facility.
   
Some countries such as France want to increase the overall ceiling of the credit line to give political support to the region while others like Germany are much more reluctant.
   

Date created : 2009-03-19

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