Economic crisis in Europe is not over, even though the euro has stabilized, according to bankers and finance ministers attending the World Economic Forum in Davos. They warned that overcoming massive economic problems and unemployment will last for years, according to CNBC.
“There is a clear divide between the financial markets, who think a lot of this is fixed, and the people in the real economy and particularly from our side as the governments,” said Swedish Finance Minister Anders Borg.
Unemployment in Europe will decline by only 0.1 percentage points this year to 11.7%, the economy is stagnating, real wages do not grow in most countries, and Sweden and France will need years to reform their own labor markets , according to Borg.
“So it is very dangerous to declare that the crisis is over because that would undermine the crisis insight that we need to have among the companies, among the population, among the unions, to be able to go through this process,” added the Swedish official.
Sweden is not a member of the eurozone that includes 17 countries, and Borg was among the most ardent critics of the manner in which the region has handled the sovereign debt crisis since the end of 2009.
IMF Managing Director Christine Lagarde and CEO of Deutsche Bank Anshu Jain, who chaired a closed-door meeting in Davos, refused to give out any information or issue statements. Participants reported that this year’s atmosphere at the World Economic Forum was more relaxed than 12 months ago, when there were talks about the adoption of urgent measures to prevent eurozone collapse.
A representative of a European bank that refused to give his name said the optimism on financial markets on overcoming the risk of splitting the eurozone was still real. “The crisis is not over and the notion that tail risk is gone is a dangerous one,” said the banker.
Reply