America may have hosted this weekend’s financial crisis summit in Washington, but it was Europe which was the driving force behind it. All involved insisted it had not been easy to bring more than two dozen countries, and all those competing interests, together.
But French President Nicolas Sarkozy said Europe had shown “complete unity” and now there was a clear way forward. “We have a clear strategy: a relaunch, financial regulation, refusal of protectionism, reform of the global system. The financial ministers have instructions, and there will be a follow-up summit at the end of March or beginning of April.”
When the summit was being organised the Eurozone was not officially in recession. Now it is, and that is perceived as the biggest threat. “We are living in exceptional conditions,” said EU Commission President Jose Manuel Barroso. “The threat today is not inflation, but deflation. The threat today is a recession.”
The budgets of many European countries have been thrown into turmoil by the crisis, as governments have been forced to fund bail outs, tax cuts and profer aid to struggling businesses. Bigger deficits are inevitable, threatening the overall stability of the Eurozone.