ROUNDUP EU finance chiefs say no risk of recession for Europe UPDATE
01.22.08, 6:17 AM ET
BRUSSELS (Thomson Financial) - The EU's finance chiefs expressed confidence that Europe would not follow the US into recession as they entered their regular monthly gathering here.
EU economic and monetary affairs commissioner Joaquin Almunia stressed that the current economic threat is the danger of a US recession rather than a global downturn.
'It's not about a global recession -- it's about the risk of a US recession,' Almunia told reporters amid rumours that the US Federal Reserve and perhaps other central banks will announce an emergency cut in interest rates.
'The question is how the US will avoid a recession,' he said, adding: 'I hope that they will be able to avoid a recession and in this case I think calm will come back.'
Slovenian finance minister Andrej Bajuk, whose country holds the six-month EU presidency until June 30, said he and his European counterparts 'are very concerned about the situation'.
However, Bajuk added: 'We believe that with strong fundamentals Europe can cope.'
Euro group president Jean-Claude Juncker responded, when asked if there is a risk of a global financial collapse: 'I don't see a danger.'
Juncker said that 'we as Europeans and the euro zone are better placed than the US' to resist a downturn.
'When financial markets act irrationally, they're driven by herd behaviour,' he said of the slide in share prices in Europe and elsewhere.
'That's no reason for ministers to do the same,' he said.
Italian finance minister Tommaso Padoa Schioppa warned that 'we have difficult months ahead' of us.
Padoa Schioppa said that Slovenia's presidency will be one characterised by 'financial turbulence'.
Last night, Juncker said a US recession can no longer be ruled out, but warned against any overreaction to yesterday's slide in share prices.
'In recent months, we have always ruled out a recession in the United States, but we cannot totally rule it out today,' the Luxembourg prime minister and finance minister said.
He conceded that if a recession 'materialised it would not be without consequences for the euro zone', adding that in any case growth would be weaker this year than previously estimated.
Also last night, French finance minister Christine Lagarde suggested the European Central Bank should not raise interest rates, and should possibly lower them, 'if growth significantly weakens in the euro zone'.
victoria.main@thomson.com
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