Barroso warns Euro critics ‘We will stick to our course’
European Commission president Jose Manuel Barroso yesterday issued a stark warning against euro currency critics, stressing that “those who think it can be put in question must realize, we will stick to our course.”
Speaking yesterday before the European Parliament approved his new college of commissioners, President Barroso stressed that Europe’s political commitment to the euro means investors would be wrong to bet against the single currency.
“The euro will continue to constitute a major tool for our development,” Barroso told MEPs at the European Parliament in Strasbourg, adding that “the EU has the necessary framework to address all challenges that can appear.”
The euro has dropped to an eight-month low against the dollar amid concern that widening budget deficits will stifle the EU’s economic recovery. Greece has the region’s largest budget gap at 12.7 percent of gross domestic product, more than four times the EU limit.
Greek Prime Minister George Papandreou’s government is seeking to convince investors it can bring the deficit to within the EU’s ceiling of 3 percent of GDP in 2012. Greek two-year bond yields have surged to the highest in almost a decade and concerns about budget sustainability are spreading to Spain and Portugal.
“In the case of Greece, we have the capacity to assess and monitor its fiscal-adjustment program,” Barroso said, adding that “we have the possibility to recommend bold structural reforms.”
Barroso’s words came two days before an EU summit supposed to discuss long-term economic plans for jobs and growth, however, the meeting is expected to be overshadowed by the Greek crisis and the question of a possible bail-out for Athens to restore world confidence in the currency.
Germany and France are strongly resisting a bail-out, but hopes that markets will calm without intervention have proved wrong so far.
One last-ditch option is resort to the International Monetary Fund, a move which would reinforce fears in some markets that the euro is in deep trouble.
