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EU takes different approach to financial crisis

(Xinhua)
Updated: 2009-03-22 09:24

BRUSSELS -- European Union (EU) leaders concluded their two-day spring summit on Friday with the adoption of a common position for the upcoming Group of 20 (G20) financial summit in London.

EU rotating Presidency Czech Prime Minister Mirek Topolanek (L) talks with European Commission's President Jose Manuel Barroso during the press conference after the first day meeting of EU spring summit in Brussels, capital of Belgium, March 19, 2009. [Xinhua]

The leaders made it clear that the EU will take a different approach to the financial and economic crises instead of following the steps of the United States.

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US officials had repeatedly called on the EU countries to step up fiscal stimulus to boost demand as a way out for the current financial crisis. But EU leaders did not yield to this line.

The conclusions of the EU summit called for the strengthening of coordination on fiscal stimulus measures, and the implementation of the existing package. There was no mention of the need to commit more money to stimulate the economy.

Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU presidency, said EU leaders felt that they should not take orders from the United States, and that the EU's priority is to implement the existing stimulus plan and to observe its effectiveness.

In fact, EU leaders are also facing internal pressure to increase the economic stimulus. But they were adamant.

On the eve of the EU summit, the International Monetary Fund (IMF) released its latest projections, which indicated that the euro zone economy will shrink 3.2 percent this year, a situation far worse than originally estimated.

With the economy sliding into recession, the EU's employment is rapidly deteriorating, giving increasing pressure to governments. As the EU summit was going on, hundreds of thousands of French workers took to the streets, launching a nationwide strike for a second time this year. On the eve of the summit, EU trade unions also urged the EU to increase investment in order to create more jobs.

But unlike the United States, which seems to be able to borrow endlessly, EU member states are subject to strict fiscal discipline under EU rules. They must suppress deficits to ensure stable and sustainable economic growth.

As deficits are approaching or exceeding the ceiling set up by the EU, national governments find themselves in a very difficult position to give more money as stimulus.

The biggest resistance within the EU was its largest economy -- Germany. German Chancellor Angela Merkel warned ahead of the EU summit that the differences across the Atlantic posed a threat to global recovery efforts and that countries should not compete with the sizes of their economic stimulus packages.

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