Tuesday September 30, 2014 Search
Weather | Athens
26o C
17o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
EU needs fiscal policy in fight to raise inflation, Bruegel says

By Rebecca Christie

European Union leaders need to bring taxes and public spending into the fight to speed up inflation in order to spur growth and fend off another round of crisis, according to the Bruegel research organization.

For the euro area and the rest of the EU, inflation needs to move toward the European Central Bank’s target of just below 2 percent, Bruegel Director Guntram Wolff and senior fellow Zsolt Darvas wrote in recommendations to the EU’s incoming leadership. The European Commission and the European Council can’t count on the ECB to do all the work to restore price levels, they wrote.

“You should state this necessity clearly and support an expansionary policy stance,” Darvas and Wolff wrote. “You should also highlight to finance ministers that monetary policy alone would be too slow in pushing inflation back to 2 percent, and therefore national fiscal and income policies should also play a major role in this process.”

Germany, the Netherlands and the Nordic countries need to boost domestic consumption and bring down their current account surpluses, the Bruegel authors said. “Public and private investment and wages will have to rise.”

Austerity policies have been the linchpin of European economic strategy, with Germany and its allies calling for continued emphasis on debt reduction while France and Italy seek a more expansive approach. ECB policy makers meeting in Frankfurt on Thursday may discuss whether quantitative easing is needed to bolster prices and economic output.

Debt restructuring

Wolff and Darvas said the EU needs to brace itself for the crisis to re-emerge. This could include laying the groundwork for future debt restructuring such as Greece faced as a condition of its second bailout.

“You might have to advocate debt reprofiling or even restructuring if debt is unsustainable,” Bruegel said. “As this would have substantial implications for financial stability, significant work to reduce the impact on the financial sector is needed.”

The EU think tank, funded by the European governments, institutions and corporations that are its members, is offering recommendations across the spectrum of the European Commission’s responsibilities.

On financial services, the EU needs to face that its “compliance with global standards has become spottier than many Europeans acknowledge,” according to senior fellow Nicolas Veron and affiliate fellow Silvia Merler. For example, the EU has been “a laggard rather than a pioneer” on the newest Basel capital standards.

Trade deal

The EU will need to rethink its approach to its proposed trade deal with the U.S., the Trans-Atlantic Trade and Investment Partnership, and make sure it doesn’t become a “west against the rest” strategy, said visiting scholar Suparna Karmakar and senior fellow Andre Sapir. The new trade commissioner also will need to keep an eye on labor, trade and environmental regulations to make sure they don’t turn into protectionist trade barriers, they wrote.

In the area of competition, the EU should not be swayed by criticism that its anti-cartel actions are “ruthless,” said research fellow Mario Mariniello. “Most importantly, the fines imposed appear minimal compared to the degree of harm caused to the European economy by collusion,” he said.

Mergers should be assessed based on their potential benefits as well as effect on the marketplace. In the case of cartels, the EU should weigh personal sanctions on individual employees who make decisions at companies that engage in collusive behavior, Mariniello said.

Digital content

EU citizens should be able to access digital content from anywhere and the EU will need to rethink its copyright policies, according to the Bruegel memos. The think tank also urged the commission to do more to create a single market for the digital economy.

“Youtube and Netflix account for more than 50 percent of downstream traffic in the U.S.; cleaner more unified licensing rules on digital content can have a strong impact,” wrote Mariniello. “Net-neutrality regulation ought to be the same everywhere in Europe, and you should not shy away from challenging national laws that clash with European law.”

The memos will be available on Bruegel’s website: eu2do.bruegel.org

[Bloomberg]

 

ekathimerini.com , Thursday September 4, 2014 (11:02)  
EU gives more aid to farmers hurt by Russia sanctions
Greeks ruled ship market in August
Nine properties to be auctioned next week
Retail price of milk has dropped by 5-10 pct
Commissioner-designate Avramopoulos to face three-hour interview on EUs migration portfolio
Greek Defense Minister Dimitris Avramopoulos, the EU commissioner-designate for migration and home affairs, will be heard by the European Parliament's Civil Liberties, Justice and Home Affai...
Roma camp off Mesogeion Avenue set for demolition amid reactions
A Roma encampment that has stood just off Mesogeion Avenue behind the present-day Nomismatokopio metro station for the best part of 40 years is set for demolition on Tuesday, with residents ...
Inside News
SOCCER
All team sports suspended next weekend in memory of dead fan
The government announced on Monday the suspension of all team sports events in Greece scheduled for next weekend, October 4 and 5, in the memory of the Ethnikos Piraeus fan who died a few ho...
SOCCER
Karamanos punishes Michel for deeming him surplus
Atromitos forced Olympiakoss first loss this season in all competitions on Saturday to allow PAOK to go alone on top of the Super League table on Sunday. Odds-on title favorite Olympiakos l...
Inside Sports
COMMENTARY
Next-day jitters
It is usual for Greek governments, whether one-party or coalitions (which are normally loath to actually work together), to claim that their only real challenge is dealing with the countrys...
EDITORIAL
No sweet debt deals
The lions share of Greeces debt is held by European Union member states and the International Monetary Fund. A writedown of the European part of the debt would require the approval of the ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. EU gives more aid to farmers hurt by Russia sanctions
2. Commissioner-designate Avramopoulos to face three-hour interview on EUs migration portfolio
3. Roma camp off Mesogeion Avenue set for demolition amid reactions
4. Greeks ruled ship market in August
5. Nine properties to be auctioned next week
6. Retail price of milk has dropped by 5-10 pct
more news
Today
This Week
1. Roma camp off Mesogeion Avenue set for demolition amid reactions
2. Next-day jitters
3. No sweet debt deals
4. Commissioner-designate Avramopoulos to face three-hour interview on EU's migration portfolio
5. EU gives more aid to farmers hurt by Russia sanctions
6. The shocking thought of euro-dollar parity
Today
This Week
1. Alexander the Great's tomb not at Amphipolis, says Culture Minister
2. Greece may opt for unusual president to avoid snap polls, Venizelos says
3. Woman allegedly buried alive by accident in northern Greece
4. Salaries in Greece continue to slide, dipping 1.4 pct in Q2
5. Venizelos denies jihadis are being trained in Greece
6. Should you bet with Kissinger on where the world is heading?
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.