EU: European leaders seek to reassure over economic turmoil
Europe's economic fundamentals remain sound but there is no room for complacency in the face of recent global financial turmoil
LONDON, January 30, 2008 - Europe's economic fundamentals remain sound
but there is no room for complacency in the face of recent global financial
turmoil, five key leaders said after a mini-summit in London Tuesday.
Seeking to reassure markets, the leaders of Britain, France, Germany, Italy
and the European Commission pledged themselves to an "open global economy" to
weather financial storms complicated by banking crises in France and Britain.
"Financial markets globally have suffered a prolonged period of turbulence
triggered by the sub-prime crisis in the United States which spilled over into
other financial markets," they said in a joint statement read out by summit
host British Prime Minister Gordon Brown.
"Prompt and coordinated action has helped to ease the immediate problems,
though there is no room for complacency," they added.
"At this time of global uncertainty we need to signal our commitment to an
open global economy," the statement continued, while insisting that "the
fundamentals of the European economies remain sound".
Speaking before the talks at Brown's Downing Street offices, the British
leader's spokesman said the aim of the meeting was for the European members of
the Group of Eight (G8) industrialised nations to coordinate their thoughts.
A meeting of G8 finance ministers next month is expected to take forward
any specific proposals before the group meets in Japan in July, he added.
The talks come amid the continuing fall-out from the crisis in the US
subprime mortgage sector that saw a squeeze on the global credit markets.
The market turmoil -- which triggered an emergency 75 point rate cut by the
US Federal Reserve last week -- has been compounded by a rogue trader scandal
at France's Societe Generale bank and the near collapse of Britain's Northern
Rock mortgage lender.
On Tuesday, stock markets in Asia and Europe rallied after an overnight
rebound on Wall Street, recovering some of their recent heavy losses as
investors pinned their hopes on another US interest rate cut, dealers said.
Brown will also be looking to gain support for his plans to reform global
institutions like the IMF and the World Bank, which he believes are now
ill-suited to the modern, globalised world.
British finance minister Alistair Darling underlined this point ahead of
"The problem we have got just now is that many of the structures we have,
such as the (International Monetary Fund) for example, were designed in the
aftermath of the Second World War for a completely different world," he told
"We have got to make sure that all our institutions can cope with a world
in which a problem in one part of it can spread to the rest of it within a few
French President Nicolas Sarkozy, whose predecessor Jacques Chirac was long
accused of protectionist instincts to defend French companies, echoed his
British host's views.
"We want transparency, we do not want protectionism. We want the markets to
be free, we want free and fair competition," he said in French.
There was also concern in some quarters about the implications for the EU
as a whole of a mini-summit involving only the leaders of the 27-member bloc's
four biggest economies.
The EU's Slovenian presidency said the bloc's handling of the financial
turmoil should be coordinated by all 27 countries.
"I believe the discussion and the decisions should be taken within the
institutional channels of the European Union," said Slovenian Finance Minister
"I do expect ... that I will receive the proper information from the
participants" after the London talks, he added.