Europe seeks billions of euros to revive economy

Milan-Italy (Sept 14)   The European Union sought ways on Saturday to marshal billions of euros into its sluggish economy without getting deeper into debt, casting the net wide to consider options from a pan-European capital market to a huge investment fund.

Finance ministers from the bloc’s 28 countries are fleshing out a host of ideas circulating in European capitals. With interest rates already at record lows, ministers need radical steps to help growth at a time of near record unemployment.

From Poland’s 700-billion-euro ($907 billion) ‘European Fund for Investments’ to the European Central Bank (ECB)’s plan to resurrect the EU’s market for asset-backed securities, Europe’s ability to get credit flowing to small companies is central to its economic revival.

“We’re thinking about instruments that facilitate investments,” Italy’s economy minister, Pier Carlo Padoan, said as he arrived for the gathering in Milan.

“Resources (for investments) will come mostly from the private sector but of course public sector resources will be instrumental in leveraging them,” he said.

The European Union’s economy, which generates about a quarter of global output, grew by just 0.1 per cent last year and its jobless rate is almost double that of the United States, with around 25 million people unemployed.

Investment is the new buzz word among ministers, overriding the German mantra of budget cuts. Germany is under growing pressure from partners like France and Italy to loosen the fiscal reins and use its overflowing government coffers to ramp up public investment.

But German Finance Minister Wolfgang Schaeuble this week rebuffed calls for Berlin to spend more to boost the euro zone economy which showed no growth in the second quarter as recovery stalls.

In a speech in Milan, ECB President Mario Draghi described business investment as “one of the great casualties” of the financial crisis, saying it has fallen 20 per cent since 2008.

“We will not see a sustainable recovery unless this changes,” he told officials on Thursday night. The incoming president of the European Commission, Jean-Claude Juncker, wants a 300 billion-euro ($410 billion) investment programme to revive the European economy.

Source:  GulfToday.ae