International bankers and finance ministers warned on Saturday that Europe’s crisis was not over even though the euro currency is now stabilised, it will take years to overcome economic malaise and mass unemployment in Europe.
After a private meeting of leading commercial bankers, government officials, central bankers and trade union officials, Swedish finance minister Anders Borg told Reuters: “There is a clear divide between the financial markets, who think a lot of this is fixed, and the people in the real economy and particularly from our side as the governments.”
Unemployment in Europe would only fall from 11.8 to 11.7 per cent this year, growth was stagnant, real wages were not rising in most countries and it would take countries such as Sweden and France years to reform their labour markets, he said.
“So it is very dangerous to declare that the crisis is over because that would undermine the crisis insight that we need to have among the companies, among the population, among the unions, to be able to go through this process,” Borg said.
Sweden is not a member of the 17-nation euro zone and Borg has been among the strongest critics of the bloc’s handling of its sovereign debt crisis since late 2009.
International Monetary Fund Managing Director Christine Lagarde and Deutsche Bank co-chief executive Anshu Jain, who co-chaired the closed-door meeting on the sidelines of the World Economic Forum declined to speak to reporters.
European Central Bank President Mario Draghi left Davos before the meeting.
Chinese central bank deputy governor Yi Gang, who attended the session, said he had voiced most concern about trade protectionism and the negative consequences of money-printing by the US, Japanese, British and other central banks.
“Protectionism is a big problem and also you see quantitative easing of developed economies is generating uncertainties,” he said.
“There is too much liquidity, a glut of global liquidity. Competitive devaluation is certainly one aspect of that. If everybody is QE or super QE and you want to depreciate, what currency do you depreciate against?”