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The financial turbulence has calmed down somewhat. The European economy is showing signs of consolidation and reassuring news has been issued by the business world. The eurozone states are borrowing on the market at acceptable rates. Greece has been the beneficiary of an unprecdented rescue plan.
However this progress still has to be confirmed. The G20 in Mexico has called on the euro zone to mobilise more funds to face any debt default of another State (firewall). At this stage we have lost count of the zeros and Europeans are hesitating to add anymore. The European economy does not draw its strength from easy money, but more from its structural base. And so it has to force itself and this is not an easy task. Recovery means that Greece has to undergo a drastic slimming exercise, in the same way it demands austerity on the part of the others European States. We now have to find the true support of the people.
There is great uncertainty in the USA whose debt has now risen to 107 per cent of the GDP and which does not seem to be decreasing. The prospects for growth in Europe are still not of a level to inspire the optimism that is vital for economic recovery and we are still waiting for a concerted European plan for growth. Finally monetary, budgetary and world trade imbalances continue to exist and progress towards a solution to this problem has still not really been made.
The European Union that was designed initially for quiet times, has delayed in responding to the challenges that have been thrown at it - but it will succeed in the end - in its own way, which demands working together, negotiation and abnegation. It still has to complete its new governance but progress has been made; however these measures now have to be implemented rapidly. A new treaty governing fiscal union will be signed on March 1st. Even though its seems necessary to complete this, it is vital for a return to confidence. It must be ratified as quickly as possible. political uncertainty must not weigh over the return of confidence without which nothing is possible.
In the USA, France, Greece major elections are to be organised this year and we are justified in thinking that they may not provide the best counsel in this particularly difficult time... We now know that we shall have to go further towards true European economic governance and make institutional reforms that go deeper than those that have been started. We know that it has been the same from a global point of view but we are still waiting on a consensus for that. So the time is not right for political declarations or over ambitious programmes. What we need right now is continuity regarding the work that has already been started. We need pragmatism in the face of present events - in Europe more than anywhere else!