Following a Eurogroup meeting it has been the turn of Europe’s finance ministers to get together and tug at the EU’s steering wheel.
Two key statements have come to the fore. The first is that, in the ministers’ opinion, the financial crisis is more or less sorted, and that we are now in the teeth of an economic crisis instead.
Secondly, for the first time, Europe – and not individual member states - appears ready to open the fiscal taps.
It is all about growth, or rather lack of it. This year’s figures have already been revised down, with a net contraction in the second half of the year. 2009 will be worse, when Europe will be lucky to grow at all, and in 2010 it will only return weakly.
“Now it’s time to apply the right economic policies to counter this exceptional slowdown. This is why we’ve agreed to trigger a counter-cyclic budgetary policy, which we happily agreed to build into the EU’s Stability and Growth pact when we reformed it in March 2005,” said Eurogroup
president Jean Claude Juncker.
The f-word, flexibility, has been uttered. It seems no central bank will now fall foul of Brussels‘ golden financial rules. Keeping people in jobs and shopping appears a prize worth paying the risk of higher inflation for.