Several European countries, notably France and Germany, have resisted President Obama's calls for further large stimulus packages and even greater deficit spending says Sonoma State University Economics Professor Florence Bouvet.
She is available for commentary to the media.
She reports:
"Several factors can explain their opposition to larger fiscal spending. First, national fiscal policies of countries that have adopted the Euro are constrained to keep their budget deficit below 3% of GDP by the Stability and Growth Pact. France's budget deficit is forecast to reach 5.6% in 2009, and the European Commission has already asked France (along with Spain, Greece, and Ireland) to bring its deficit below the 3% threshold by 2012."
"Second, European leaders correctly argue that their countries' extensive social safety nets (job protection programs and generous unemployment benefits) limit the need for large government spending, as these programs soften the social impact of rising unemployment."
"However, given that the current recession has so far been as severe in Europe as in the US, European governments might have to resolve to more fiscal interventions after all."
Contact information:
Florence Bouvet, Professor of Economics and an expert on The European Union, and EU regional economics.
E-mail: bouvet@sonoma.edu
Office Phone: (707) 664-3074
