HIGHLIGHTS-EU’s Rehn on 2010 GDP, inflation forecasts

BRUSSELS, Feb 25 (BestGrowthStock) – The following are comments by
European Economic Affairs Commissioner Olli Rehn at a news
conference on Thursday after the European Union executive issued
2010 growth and inflation forecasts for the EU and euro zone.

The EU economy is recovering from the deepest and longest
recession in its history, but growth is still fragile and risks
in 2010 are broadly balanced, the European Commission said.

For GDP forecasts, click on [ID:nBRQ009751]

For inflation forecasts, click on [ID:nBRQ009752]

For story, click on [ID:nBRM002150]

On Greece:

“It is indispensible that we can consolidate public finances
in Europe. Our mission is now in Athens. A joint technical
mission of the Commission … the European Central Bank … and
the IMF … I will have a report on this data tomorrow. I am
going to Greece next week to discuss the fiscal situation and
future financial stability of the euro zone.”

On debt, investment:

“I am concerned over both investment in growth and jobs and
on the sustainability of public finances. In many if not most
member states, we are seeing a very high rise in debt … which
means an increasing interest burden.”

On EU public finances:

“We know that the state of public finances is clearly
unsustainable. We have to see a clear and strong consolidation
of public finances. The only way is to prioritise clearly … to
enhance the quality of public finances so we have room for
investment. We have to find new and innovative financial
instruments to facilitate investments for these purposes.”

On Britain:

“The UK public-sector deficit was very large last year, this
year. That causes a … challenge for the UK policymakers. In
the latest round of excessive-deficit procedures, there was a
clear path of adjustment indicated and it is indispensible that
the UK meet this target of stabilising its public finances over
the coming years.”

On risks to Britain: “There are several factors but in my
view the consolidation of public finances is top of the list.
Failing to achieve this would certainly hamper the medium- and
long-term capacity for economic growth.”

On inflation, risks:

“While aggregate inflation projections remain largely
unchanged, developments across member states do diverge. Outside
the euro area, inflation has been revised up. Amid high
uncertainty, risks to EU growth appear broadly balanced. There
are some new developments. Some of the factors may carry a
larger risk than previously thought.”

“The recent financial market developments indicate the
market concerns about the sustainability of the public finances
of some member states could be a source of tension and this
could lead to higher financing costs for firms and households.”

“Emerging markets may continue to surprise positively.
Turning the European economy back on a strong and sustainable
path is now our overriding objective.”

On economy:

“Clearly, we have some brighter and whiter elements
emerging, but there are still some dark clouds in the air.”

On bank lending:

“It cannot be excluded that the state of the banking sector
will limit lending to … households later in the economic
recovery. This of course remains a major risk and challenge for
the recovery.”

“Money market rates have remained low. The banks’ balance
sheet adjustment is not yet complete. The recovery of the
banking sector is ongoing but still appears fragile. Bank
lending to non-financial enterprises has continued to decline in
the euro area while lending to households has begun to recover
somewhat.”

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HIGHLIGHTS-EU’s Rehn on 2010 GDP, inflation forecasts