The United States and Japan need to tackle their tax issues and China must relax restrictions on the yuan as they share responsibility with Europe for restoring global economic health, EU leaders said ahead of a June summit of the G-20 economies.
In a letter addressed to all 27 European Union nations, European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said Europe was doing all it could.
“Europe has stepped up and assumed its special responsibility for securing the financial stability of the euro area and we will continue to do so,” said the letter in the run up to the G-20 summit in Los Cabos, Mexico. “It is now up to all G-20 members to enhance their efforts and deepen our cooperation in order to ensure a sustained global economic recovery.”
In particular, it looked to the United States to avoid falling off a “fiscal cliff” — avoiding the problems that could result from tax rises and spending cuts meant to take effect at the end of the year. It also called on China to deliver reforms. “Whilst we are firmly focused on playing our part, at Los Cabos, all other G-20 partners should also recognise their responsibilities in building a sustainable recovery,” the letter, made public late on Friday, said.
The United States and Japan also needed to implement “credible medium-term fiscal consolidation plans”, it wrote. “We should also call on China to continue strengthening its social safety nets, carry out further structural reforms and move to a market-determined exchange rate.”
Europe’s emphasis on the efforts needed from other nations follows protracted criticism it has not done enough to spur growth.
At a G-8 summit earlier this month, the leading industrialised nations came down in favour of balancing austerity — as favoured by German Chancellor Angela Merkel — with US-style stimulus.
An informal summit in Brussels, which ended in the early hours of Thursday, was the first following the election of Socialist President Francois Hollande in France. It marked a shift in EU emphasis towards growth and the end of close agreement between Hollande’s predecessor Nicolas Sarkozy and Merkel on debt-cutting.
Rompuy and Barroso said data had shown EU-internal imbalances were being reduced, although more needed to be done and, in this context, it referred not just to countries in deficit, but also those in surplus.
A senior official from a G-20 nation, who asked not to be named, said many countries would be pushing for a better balance between fiscal adjustments and growth at Los Cabos.
“There’s a view to stress the importance of measures to boost global growth, that fiscal consolidation can’t be allowed to hurt growth,” the official said.
The official also said countries were ready to send a “clear message of support to the eurozone and to maintain the integrity of the eurozone”.