Brussels, 09/09/2008 (Agence Europe) - In a speech made on the eve of the publication of new Commission economic forecasts, Joaquin Almunia, confirmed the sluggishness of the European economy. The commissioner for economic and monetary affairs was speaking at a conference in Frankfurt where he explained that OECD and ECB prospects for the second half of 2008 and beginning of 2009 “are not very good”. Almunia stressed that 2008 is a “difficult year”, the situation “unusually uncertain” with “few signs for improvement”. Although financial turbulence was lasting longer than expected, Almunia said that they were “at a crucial juncture” and inflation had peaked in August at 3.8% in the eurozone. An appropriate response is required in four areas:
Mr Almunia affirmed that in monetary affairs, “the ECB is doing a good job in difficult conditions and they deserve our full confidence and support”. The commissioner also appealed for the continuation of healthy budgetary policies. One major factor in his communication on strengthening the Economic and Monetary Union (EUROPE 9656), is the expansion of macroeconomic monitoring of issues involving competitiveness, external imbalances, structural inflation and labour costs.
With the financial sector still confronting the same difficulties more than a year after the sub-prime mortgage crisis occurred, the commissioner intends to reinforce transparency and risk management in an effort to improve market confidence. The informal EU finance ministers meeting in Nice will therefore allow for implementation of the roadmaps, defined by the Ecofin Council last October, to be examined.
With regard to structural reform, Mr Almunia said that “a determined effort in this domain is now urgent” if investor and consumer confidence is to be boosted and the effects of the economic slowdown are to be reduced. Full implementation of the Services Directive is “imperative”, as is the scrapping of the barriers onto the energy markets and the improvement of energy infrastructures. According to Almunia, labour market reform would help reduce the impact of the crisis on households that have been most affected.
Finally, Almunia hammered home the fact that at an external level, a concerted effort by eurozone countries to coordinate their position and elaborate a coherent strategy at the international body is necessary and that “only then can the Euro area, as issuer of the world's second most important currency, gain a stronger influence in global policy making”. (A.B./transl.rh)