Brussels, 07/02/2008
At the current time:
- Strong transatlantic economic ties mean the euro area will not escape recession in the US economy.
- The Federal Reserve’s policy of aggressive rate cuts will work to undermine the dollar and the euro area’s competitive position.
- The subprime-induced financial crisis has not been contained at all, but is spreading in an alarming way. Potential investors are confronted with a credit squeeze as well as higher credit costs.
- Business cycle indicators are going down, indicating growth prospects are shallow.
Says ETUC Deputy General Secretary Reiner Hoffmann: “The European Central Bank has been receiving one wake-up call after another. The ECB needs to cut interest rates right now if it wants to get back in front of the business cycle.”