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US Treasury warns over EU's recovery

Thursday 16 September 2010 - by Andrew Hickley

The Assistant Secretary for International Finance at the US Treasury has warned that Europe’s recovery from the financial crisis may be slowing down.

Speaking at the Bruegel Institute yesterday, Charles Collyns said that while generally Europe is improving as a whole, figures since austerity measures have ended are worrying.

He said: “It’s encouraging that the European economies are also on the path to recovery, but there are uncertainties.

“Activity may be slowing again as the boost from stimulus and trade normalisation fades. Moreover, domestic demand remains quite sluggish, especially at the core."

Collyns admitted that the US is currently unable to take charge in restoring growth globally. He called on emerging economies in the Far East to embrace a higher manoeuvrability over exchange rates, with the hope that this can help drive domestic impetus.


He said: “While imbalances declined during the crisis, this was largely a cyclical phenomenon, and now there are signs that they are widening again. The US economy can no longer be the driver of global demand.

“Countries with current account surpluses need to do more to boost domestic demand, including through greater exchange rate flexibility in some countries in Asia.”


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