Brussels, 18/09/2007 (Agence Europe) - As things stand, the fundamentals of the European economy remain generally good, but BusinessEurope has expressed concern about the prevailing, growing uncertainty on the financial markets. During a press conference on Monday 17 September, BusinessEurope President Ernest-Antoine Seillière gave his assurance that he had “no doubt” it would be possible to put the banking system back on its feet. The organisation stresses that, after the necessary correction with a further risk assessment on the financial markets, it is now essential to restore confidence. It calls on decision-makers to act along these lines but without choosing a regulatory approach.
Growth in the EU should be around 2.5% of GDP this year, somewhat lower than that in 2006, the European business confederation notes. Investment and exports are currently the most dynamic elements of growth, while private consumption is making slower progress. As the Commission's recent interim forecasts show (EUROPE 9499), the differences in the performances between member states are nonetheless significant. Austria, Spain, the United Kingdom and Sweden have notched up growth above 3%, whereas Denmark, France, Hungary, Italy and Portugal are struggling to reach 1.5%. With the slowdown in the American economy and the recent upheavals on the financial markets, risks have considerably increased over recent months.
Europe will not be left unaffected by a marked slowdown in growth in the United States unless it is able to generate stronger and more lasting demand while taking better advantage of the sound Asian economy in particular, BusinessEurope stresses. Also, the loss of confidence between commercial banks, which resulted from the crisis on the American sub-prime mortgage market, heightens the uncertainty surrounding European business financing conditions. Welcoming the rapid, decisive action taken by the European Central Bank (ECB), BusinessEurope congratulates the Frankfurt institution on its independence, nonetheless calling on it to remain practical when it comes to interest rates. The ECB should above all take the international monetary situation into account before taking its decision, the organisation says, while a fall in rates by the US Federal Reserve was largely expected during its meeting on Tuesday 18 September. Opposite interest rate movements on either side of the Atlantic (a fall in the USA but a rise in the eurozone) have not occurred since the euro was launched. This could cause exchange rate volatility and accentuate single currency appreciation compared to the dollar, BusinessEurope notes, expressing concern.
Improvements to the current regulatory framework, which is hoped by some, should not necessarily mean more regulation. In this debate, the organisation urges for an approach based on auto-regulation and voluntary codes of conduct, but recognises the need for greater transparency (for discussions between EU finance ministers on this subject, see EUROPE 9503). Solutions, in any case, can only be set in motion at international level (at the IMF, the Bank for International Settlements, etc) and be discussed in forums such as the G7. (ab)