The OECD highlighted concerns that the euro will remain a danger for the world economy if policy decisions prolong the current recession.
Pier Carlo Padoan, OECD chief economist, said: “In the euro area, still-rising unemployment is the most pressing challenge for policymakers. Protracted weakness could evolve into stagnation with negative implications for the global economy.” This, he said, would raise the spectre of further weakening banks, higher government borrowing and the threat of a country being forced to leave the single currency.
Boris Johnson has billed London a a world class city able to compete in technology and finance. The city of London is a major financial center and the FTSE its trading floor is control by high speed trading computers. The OECD has lowered growth forecasts for the UK. According to the Guardian “
Throughout the euro crisis the European Central Bank (ECB) has resisted following the unconventional monetary policies pursued by the Bank of England, the US Federal Reserve and more recently the Bank of Japan, preferring to act as an insurer of last resort to debt-ridden eurozone nations. But the OECD urged the ECB to cut interest rates further and take a more active role in supporting an increase in lending to businesses.”
Even without a change of heart at the ECB’s Frankfurt offices, the eurozone will begin to exit its recession in the second half of the year, the OECD said, though several countries including Italy and Spain will still be contracting into 2014.
Spain’s economy is expected to shrink a further 1.7% this year, while growth of just 0.4 percent in 2014 will not create jobs. Its deficit will barely shift next year, with a drop from 7% of GDP in 2012, not including the cost of bailing out its banks, to 6.9%, while unemployment is set to rise to 28%.
Italy is forecast to grow in 2014, but by less than 1%. The OECD had little better news for France, which has seen its economy flatline for two years and its new socialist government focus more on reducing debt than creating jobs. The OECD welcomed this stance, recommending that Paris allow welfare benefits to support those who are thrown out of work as public sector cuts bite. (guardian.co.uk)
The mayor of London, conservative politician Boris Johnson and potential head of the Conservative party against UK P David Cameron. He is touting London as the economic engine of the UK.
Austrian finance minister
Austria and Luxembourg support the UK’s opposition to financial transaction tax (FTT) which will place a tax on high speed trades and derivatives. London may lose out to Singapore and Hong Kong if the FTT is enforced. So far only 11 of the 27 EU nations have signed up for the accord.
The president of the European Commission , the executive of the European Union, Juan Manuel Barosso has called for a focus on growth. The European Union has high unemployment and the FTT was proposed to avoid future bail-outs.