European Leaders Call for Greater Eurozone Transparency and Structural Reform
- Structural reforms in pension and tax structures are needed to sustain recovery
- Improvements in education and infrastructure are vital to maintaining competitiveness
- Improved economic cooperation essential to winning public confidence
- More information on the World Economic Forum Annual Meeting 2011: http://www.weforum.org
Davos, Switzerland, 27January 2011 – Europe is recovering from the financial crisis more slowly than expected. Growth for the Eurozone is projected to be 2% below the global average for 2011. European leaders at the World Economic Forum Annual Meeting in Davos say that the Eurozone needs to strengthen its identity and to make long-needed structural reforms if it wants to continue to compete in a world that is rapidly changing.
Greek Prime Minister George A. Papandreou told the participants that Greece had managed to make significant structural reforms over the last year, dramatically overhauling its pension system, tax regulations and improving transparency by putting government records on line. “We did everything by the book. We followed the recipe, but the markets haven’t responded,” Papandreou said. Papandreou said that the reason is that the markets are now looking to Brussels and Paris. “They are asking what Europe is doing for the Eurozone,” said Papandreou.
Jean Claude Trichet, President of the European Central Bank in Frankfurt, told the gathering that the Eurozone now constitutes 331 million people and is roughly comparable to the US market, and that in contrast to the US and Britain, the Eurozone managed to weather the crisis without engaging in quantitative easing. But while the monetary union had stabilized Europe’s currency to an inflation rate that is less than 2%, the lowest inflation in 50 years, Europe had been less successful when it comes to economic union. “We have a lot of work to do there,” said Trichet.
Nick Clegg, Deputy Prime Minister of the United Kingdom, blamed the situation on too much money at easy credit terms over the decade preceding the crisis. Clegg said he had initially supported the Eurozone, expecting it to lead to the implementation of far-reaching structural reforms designed to hardwire competitiveness into the economy. “It didn’t turn out that way,” he said.”Governments didn’t stick to the rule book, and they didn’t implement the reforms. Cheap credit papered over the cracks.” With Europe facing increased competition from China, India and other emerging markets, Clegg and other leaders stress the need for reforms including an increased emphasis on education and infrastructure.
“The major challenge for Europe today,”
Greece’s Papandreou said ”is to develop a model for governance which is
sustainable, just and which in the end humanizes the global economy.”
Papandreou added that the new Europe Stabilization Fund can be a major step
forward. “It should be robust and flexible enough,” he said, ”to intervene and
Notes to Editors
For more information about the
Annual Meeting 2011: http://wef.ch/Davos2011
Watch interviews with top leaders about the Davos agenda at http://wef.ch/DavosInterviews
View the best pictures from the Annual Meeting on Flickr at http://wef.ch/pix
Watch live webcasts of the sessions on Livestream at http://wef.ch/live
Watch the sessions on demand on YouTube at http://wef.ch/youtube or http://wef.ch/youku
Ask a world leader on YouTube at http://wef.ch/davosdebates
Become a fan of the Forum on Facebook at http://wef.ch/facebook
Follow the Forum on Twitter at http://wef.ch/twitter and http://wef.ch/livetweet
Check in with the Forum on Foursquare at http://wef.ch/foursquare
Read the Forum Blog at http://wef.ch/blog
Read Forum reports on Scribd at http://wef.ch/scribd
Follow the Meeting on iPhone at http://wef.ch/iPhone
Upcoming Forum events at http://wef.ch/events
Subscribe to Forum News Releases at http://wef.ch/news
For more information about the Annual Meeting, please visit http://www.weforum.org
The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.
Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).