A top European official Friday accepted, with resignation, the IMF’s description of the European economy as one of the weakest in the global economy.
“As you know, as the IMF outlook has shown during this week, the European economy is the laggard of the rate of the whole world,” said Joaquin Almunia, the European Union economics minister at a briefing for reporters.
He said the fundamental problem was that European consumers lacked confidence in the future, perhaps out of a concern that their social safety net was too expensive to be sustained.
Politicians were reluctant to press necessary economic reforms in such an environment, he said.
Almunia said the EU’s own forecast is not much different from the official IMF forecast of 1.2% growth in 2005 and below 2.0% in 2006.
European Central Bank monetary policy was not the reason for the sluggish growth.
Instead, insufficient structural reforms of labor and product markets were behind the weak growth outlook, he said.
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