EU countries ‘have to help themselves’

  


Larry Kudlow (AP Photo/Seth Wenig, File)
Larry Kudlow (AP Photo/Seth Wenig, File)

US President Donald Trump’s top economic adviser has offered sharp criticism of the European Central Bank’s revival of stimulus measures to spur the economy.

National Economic Council director Larry Kudlow said that a ECB decision last Thursday to extend a new round of cheap loans to the banking system wouldn’t be enough to fix the underlying problems.

ECB President Mario Draghi “is a very smart man. I’m not here to take his inventory,” Kudlow said. “I’m just saying, another round of that version of QE – concessionary cheap loans to banks – that’s not the answer,” he said.

“The answer is they’ve got to make labour and fiscal reforms throughout Europe, and most of those countries haven’t really done it, so their growth rates are uncomfortably close to zero.”

Kudlow’s criticisms were prompted by a question about whether the US economy could withstand a global slowdown.

He said he was confident it could, and claimed that American strength was the only thing keeping Europe afloat at the moment.

Recent data have painted a gloomy picture of the euro-area’s state of economic affairs, raising concern that the 19-nation bloc would be flirting with recession before long. The ECB responded to sharp downward revisions to its 2019 projections by announcing a fresh series of long-term bank funding and promising to keep interest rates at rock-bottom levels for longer.

“If it weren’t for the US – our consumers are buying their goods, our businesses are buying their capital goods, right, industrial goods. We’re the only demand they have,” Kudlow said.

“We are trying to help them. But at some point they’ve got to take measures – you know, help comes to those who help themselves.”

On efforts by the US and EU to negotiate a trade deal, Kudlow said the talks have been constructive and that the two sides are moving toward an “early harvest” agreement on LNG, soybeans and standards on pharmaceuticals, among other things.

Bloomberg

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