THE European Union’s €750 billion support package announced yesterday has prompted strong growth in the value of the euro and in European shares but also prompted warnings that the market’s fears were merely allayed rather than dead.
The second stage of the EU’s strategy to protect the single currency will be unveiled tomorrow when the finance ministers return to Brussels for their second meeting this week.
The union’s economics commissioner, Olli Rehn, following the 11-hour emergency meeting, warned the bloc „will defend the euro no matter what it takes”.
That decision includes insisting that all countries cut back their deficits whether by raising taxes or cutting spending, and that they speed up the process by a year or more.
Spain has been told it must do more and when asked whether it was willing to make the cuts even if it meant sacrificing growth, the country’s finance minister, Elena Salgado, said: „Consolidation is more important than growth at this time”.
Finance Minister Brian Lenihan, before leaving Brussels in the early hours of Monday morning, gave assurances this did not mean Ireland would have to make further cuts or bring in yet another emergency budget.
This was reiterated later by Mr Rehn’s spokesperson when he was asked about Ireland at a press conference. „Ireland is doing what it has to do,” he said.
Europe Minister Dick Roche, at a general affairs meeting in Brussels, said there was a sense of relief and excitement among ministers, but he added: „You never see off the speculators, they are a tough crowd. They will test the euro again, but they have learned hopefully over the weekend and lots have lost money”.
The emphasis now is on tackling the source of the problem – member states’ weak economies – and the European Commission will present proposals to tomorrow’s finance ministers meeting on introducing much tighter control over member states’ budgets that include the commission approving the broad outlines even before national parliaments approve them.
Exactly how far countries are prepared to go will be clear after the meeting, but Sunday night’s meeting kicked off the other idea of member states putting peer pressure on one another to get their finances in order.
Portugal and Spain were put on the spot by the other finance ministers and told to do more. „It was a time of truth yesterday. There was a very clear sense that this was a very serious moment in the history of our economic government,” said one commission official.
The ministers had just signed the agreement with Greece that has committed to some of the severest measures seen in Europe for decades in exchange for loans totalling up to €110bn from the eurozone and IMF. They also agreed debt reduction and a €20bn package with the IMF for Romania.
As well as dealing with the present troubles, the ministers are also looking to the future and devising a permanent EU rescue mechanism. This, and the concerted actions of the European Central Bank in being willing to buy government debt, points the way to much closer economic union in the future.
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Deal helps rally euro but fears remain
THE European Union’s €750 billion support package announced yesterday has prompted strong growth in the value of the euro and in European shares but also prompted warnings that the market’s fears were merely allayed rather than dead.
The second stage of the EU’s strategy to protect the single currency will be unveiled tomorrow when the finance ministers return to Brussels for their second meeting this week.
The union’s economics commissioner, Olli Rehn, following the 11-hour emergency meeting, warned the bloc „will defend the euro no matter what it takes”.
That decision includes insisting that all countries cut back their deficits whether by raising taxes or cutting spending, and that they speed up the process by a year or more.
Spain has been told it must do more and when asked whether it was willing to make the cuts even if it meant sacrificing growth, the country’s finance minister, Elena Salgado, said: „Consolidation is more important than growth at this time”.
Finance Minister Brian Lenihan, before leaving Brussels in the early hours of Monday morning, gave assurances this did not mean Ireland would have to make further cuts or bring in yet another emergency budget.
This was reiterated later by Mr Rehn’s spokesperson when he was asked about Ireland at a press conference. „Ireland is doing what it has to do,” he said.
Europe Minister Dick Roche, at a general affairs meeting in Brussels, said there was a sense of relief and excitement among ministers, but he added: „You never see off the speculators, they are a tough crowd. They will test the euro again, but they have learned hopefully over the weekend and lots have lost money”.
The emphasis now is on tackling the source of the problem – member states’ weak economies – and the European Commission will present proposals to tomorrow’s finance ministers meeting on introducing much tighter control over member states’ budgets that include the commission approving the broad outlines even before national parliaments approve them.
Exactly how far countries are prepared to go will be clear after the meeting, but Sunday night’s meeting kicked off the other idea of member states putting peer pressure on one another to get their finances in order.
Portugal and Spain were put on the spot by the other finance ministers and told to do more. „It was a time of truth yesterday. There was a very clear sense that this was a very serious moment in the history of our economic government,” said one commission official.
The ministers had just signed the agreement with Greece that has committed to some of the severest measures seen in Europe for decades in exchange for loans totalling up to €110bn from the eurozone and IMF. They also agreed debt reduction and a €20bn package with the IMF for Romania.
As well as dealing with the present troubles, the ministers are also looking to the future and devising a permanent EU rescue mechanism. This, and the concerted actions of the European Central Bank in being willing to buy government debt, points the way to much closer economic union in the future.
