Brussels, 18/03/2009 (Agence Europe) - Raising the spectre of a “lost decade” for the European economy, just as happened in Japan in the 1990s, the 2008 Nobel Prize Winner for Economics, American Paul Krugman has urged the EU to dramatically increase its spending to boost demand and get out of recession. “The United States is not doing enough to fight the crisis and Europe is doing a bit less than half as much as the United States. It is inadequate,” said the Princeton University economist, pointing out that Japan lost a decade's growth because of the tardy and fragmented efforts of its government to boost the economy after the speculative bubble burst in the 1990s. “We are all doing exactly the same thing now,” he warned, after a meeting with Günter Verheugen in Brussels on Tuesday 17 March. Krugman argued for a total EU recovery package of almost €500 billion, compared with the expected €200 billion. “The European response really is disappointing,” said the committed neo-Keynesian. His comments were somewhat at odds with those of the European industry commissioner who is unwilling to inject more money into the European economy for the time being. “We are not sure it would help just to inject more money into the real economy,” stated Verheugen, at one in this view with European Commission President José Manuel Barroso, who said on Tuesday that “spending for the sake of spending can easily create more problems than it solves”. Krugman says that spending in the US and European recovery plans should be 4% of GDP, rather than the 2.5% and 1.5% respectively at the current time. The European Commission believes that, once welfare state measures (unemployment benefit and social security) are taken into account, European recovery plan spending amounts to 3.3% of GDP. These are measures that Krugman welcomes, since they help tackle poverty. He felt that a large part of the EU's problems, despite the single currency and a central bank, are the result of its decentralised governance, where member states always defend national interests. “Europe has a real problem. It would be really helpful right now if Brussels had more power,” he said. (E.H./transl.rt)