Economic and Financial Affairs Council: extracts from the Joint Press conference by Andrej Bajuk, Slovenian Minister for Finance and President in office of the Council, and Joaquín Almunia
Type: Summary of press conference
End production: 22/01/2008 First transmission: 22/01/2008
Following the Economic and Financial Affairs Council, Joaquín Almunia, Member of the EC in charge of Economic and Monetary Affairs, and Andrej Bajuk, Slovenian Minister for Finance and President in Office of the Council, gave a joint press conference.
They talked about the US recession and said that EU was not facing similar problems. The rumour that the world's main central banks were about to announce a coordinated cut in interest rates is unfounded.
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||General view of the press conference
||Andrej Bajuk, Slovenian Minister for Finance and President in office of the Council, saying (in SLOVENIAN) that they believe that the foundations for the European economy are sound and much better than they are in the US. The economic growth in the EU will be slightly below potential in 2008 probably. The last forecast shows that economic reforms that have been implemented in the EU increase the resilience of the European economy in trying to face such chocks. They need to be determined on the future and with great determination implement further reforms. The Stability and Growth Pact remains to be a good framework for facing the situation in which they are today.
||Cutaway of press
||Joaquín Almunia, Member of the EC in charge of Economic and Monetary Affairs, saying (in ENGLISH) that according their analysis, the main reason why the equity market has this extreme volatile situation during these days is the risk of a recession in the US. This is not about a global recession but about the risk of a recession in the US because during the last years, big imbalances have been created, have build over the years in the US economy big current account deficit, big fiscal deficit, lack of savings. This is not at all the situation in the European economy. Our fundamentals are solid and sound. We have positive current account position, level of savings in the economies that are the levels required to finance the investments. We have sound fiscal positions. We have improved our fiscal positions. We have not sub-prime mortgages in the financial system. So we are well prepared to weather this situation even if we cannot ignore the risk of our growth rates being affected by this turmoil.
||Joaquín Almunia saying (in ENGLISH) on the question of possible coordinated interest cuts by central banks that he don't believe that this rumour is based on the reality. It is obvious that the central banks, among them the Federal Reserve, the ECB and others, have coordinated interventions to provide liquidity to the markets. But he is sure that they will preserve their independence, even regarding the other central banks when deciding the monetary policy.
||Cutaway of press
||Joaquín Almunia saying (in FRENCH) that the current account deficit and the public deficit in the US, he means, these imbalances, are the root causes of the current turbulence that they have seen since August 2007. They are not the only reason. But he thinks it is the basic cause for the situation which needs to go to a period of adjustment. As regards the response of the US authorities, any measure that they adopt should be aimed at reducing the external deficit and the fiscal deficit, at increasing domestic saving in the US both in the public and the private sectors.