EU warned about erecting new barriers to growth

Press quote (EurActiv)
17 June 2010

Rodrigues's criticisms were echoed by Simon Tilford, chief economist at the London-based Centre for European Reform. "The eurozone economy is not strong enough to cope with the contractionary effects of a generalised budgetary tightening. And if the eurozone falls back into recession, there will be no chance of putting public finances on a sustainable footing." Some countries with high debt or budget deficits – such as Greece, Portugal and Spain, for example – have little option but to cut spending now, Tilford said. However, others such as Germany, which have a large current account surplus, should certainly not imitate them, he warned. "The German government believes it is leading by example in embarking on a severe round of budget cuts. But this is the last thing the eurozone needs at this point and demonstrates an alarming parochialism. The fiscal crisis cannot be solved without economic growth. And the eurozone will only return to decent economic growth if the bloc's surplus economies, in particular Germany, start to consume more."