Investors wrong to question euro: Barroso
European Commission President Jose Barroso said Europe’s political commitment to the euro means investors would be wrong to bet against the single currency as Greece’s budget woes threaten to spread to other countries.
“The euro will continue to constitute a major tool for our development,” Barroso told the European Parliament today in Strasbourg.
“Those who think it can be put into question must realize we will stick to our course. The European Union has the necessary framework to address all challenges that can appear.”
The euro has dropped to an eight-month low against the dollar amid concern that widening budget deficits will stifle the EU’s economic recovery. Greece has the region’s largest budget gap at 12.7pc of gross domestic product, more than four times the EU limit.
Greek Prime Minister George Papandreou’s government is seeking to convince investors it can bring the deficit to within the EU’s ceiling of 3pc of GDP in 2012.
Greek two-year bond yields have surged to the highest in almost a decade and concerns about budget sustainability are spreading to Spain and Portugal.
“In the case of Greece, we have the capacity to assess and monitor its fiscal-adjustment program,” Barroso said. “We have the possibility to recommend bold structural reforms.”
The commission, the EU’s executive arm, last week endorsed Greece’s plan to reduce the deficit, pledged stepped-up surveillance of the nation’s austerity measures and dismissed the notion of an international bailout for the country.
“The worst possible signal which we could send out is one calling for outside help,” Greek Finance Minister George Papaconstantinou said yesterday in an interview with Bloomberg Television in Athens. “We will tackle the deficit.”
Barroso said Greece has a responsibility under EU budget rules to take steps to narrow the deficit.
“The solution requires, above all, action from the Greek side,” he said. “Support and the determination of the Greek authorities will increase confidence in the successful achievement of the ambitious program they have adopted.”