Friday September 12, 07:19 PM
Budget action on slowdown for each to decide-UK's Darling
NICE (Milan: NICE.MI - news) , France, Sept 12 (Reuters) - Most European finance ministers believe it is for each country to decide
how best to address the global economic downturn, British finance minister Alistair Darling said on Friday.
European finance ministers and central bankers, meeting in the French coastal city of Nice, have said the magnitude of the economic slowdown has come as a surprise but there was little appetite to copy the U.S. with big fiscal stimulus measures.
Darling argues British government borrowing can rise during the slowdown and speculation has grown he could change the Labour government's self-imposed limit of keeping public debt below 40 percent of GDP to make room for more spending.
'You will find the majority of ministers believe that in relation to their own economies, they should do what is appropriate -- and that is what they'll do,' Darling told reporters, emphasising that conditions in each country were different.
Euro zone finance ministers, who met in Nice earlier on Friday, said the EU limit on budget deficits of 3 percent of GDP should be observed and that only those countries which had balanced their books earlier could afford to spend extra cash to stimulate the economy.
This week, Bank of England Governor Mervyn King urged the government not to let public spending get out of control, arguing that if financial markets lost faith in the credibility of fiscal policy it could make the central bank's job harder, especially if it had an impact on inflation expectations.
King also said the consequences of the credit crunch also needed to be reflected in government forecasts underpinning its fiscal policy, but Darling on Friday appeared fairly upbeat about the economic prospects.
'The overwhelming view of finance ministers in the European Union is that clearly the world economy has seen a reduction of growth,' Darling said. '(But) yes, these are difficult times but they are convinced we will get through them.'
Darling said Britain was opposed to any move to create a pan-European financial market regulator to safeguard against future crises.
'It's important that regulation is principles-based, that it is focused on the markets at home, that national regulators ar very important and we don't think that we should move to a European wide system of regulation but, especially at a time like this, there needs to be increased co-operation,' he said. Keywords: BRITAIN DARLING/
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