Luxemburgse premier Juncker waarschuwt voor te veel pessimisme over economie (en)

Eurogroup Chair Jean-Claude Juncker told MEPs on Monday that the outlook for the Eurozone economy had worsened, and the next forecasts would be for lower growth and higher inflation than previously expected. Nevertheless, he warned against "excessive pessimism", stressing that the economic fundamentals were solid.

Speaking at the first of his two regular meetings with the Economic and Monetary Affairs Committee this year, Mr Juncker, who is also Prime Minister of Luxembourg, stressed that the European economy was in better shape than the American one. Recent structural reforms had improved its resilience and fiscal consolidation meant some Member States had room to allow the automatic stabilisers of the economy to act.

"We cannot speak of anything more than a slowdown; there is no risk of a recessionary spiral in Europe as there is in the United States," he said, adding that it was not necessary to adopt the same policies as the US.  International Monetary Fund forecasts for the euro area economy were too pessimistic, he added, extrapolating "almost slavishly" a worst-case American scenario onto Europe.

Financial services regulation: "we cannot wait for the next disaster to happen"

Alexander Radwan (EPP-ED, DE) was one of several MEPs to raise the issue of reforming the regulatory framework for the financial services industry, notably in the light of plans for change in the US. "Those who think financial supervision is satisfactory at present have not been looking closely. (...) We need better rules. We cannot wait for the next disaster to happen," said Mr Juncker, saying the US proposals should prompt Europe to act too.  It was a matter for action by ministers, he added, arguing that leaving new rules to the financial supervisory bodies alone to develop would be slow.

How to help the purchasing power of the less well-off?

Mr Juncker said it was important to avoid second round effects from current higher prices and - responding to Ieke van den Burg (PES, NL) - was explicit that salary increases above the rate of productivity growth were a bad thing.  However, he agreed with Benoît Hamon (PES, FR) in expressing concern about the numbers of "working poor" and stressed that those Member States with room to manoeuvre in their budgets should "consider how to relieve the burden on those whose purchasing power is being reduced," highlighting measures several Member States had taken to help people with modest means with their fuel bills.

Role of the Eurogroup

A number of MEPs, including Olle Schmidt (ALDE, SE), asked about the relationship between the 15-member Eurogroup and the 27-member ECOFIN Council. Mr Juncker said he wanted smooth relations between the Eurogroup and the non-euro Member States of the EU, but, he said: "it is natural for us [the Eurogroup] to consider issues that are important to us." That the Eurogroup's influence had grown was only natural, he said, adding that economic coordination within the euro area was too still too weak, but its development had to be a natural process supported by all governments.

Exchange rate policy

José Manuel García-Margallo y Marfil (EPP-ED, ES) asked whether a more active policy on exchange rates was on the way.  Mr Juncker said he could not comment on exchange rate policy (he had earlier quoted ECB President Jean-Claude Trichet's oft-repeated statement that rates should reflect economic fundamentals and that excessive volatility was unwelcome) but stressed the good relations between the Commission, ECB and Eurogroup on the issue, which they frequently discussed. He said unilateral action by one currency area would be futile, and added: "That does not mean I am saying coordinated action is afoot either!"

07/04/2008

Committee on Economic and Monetary Affairs

In the Chair : Pervenche Berès (PES, FR)