EU Faces Trichet’s ‘Quantum Leap’ Call as Euro Falls

Bloomberg:

European finance ministers return to Brussels today as European Central Bank President Jean-Claude Trichet calls for a “quantum leap” in policy making to help stamp out the bloc’s sovereign debt crisis.

One week after agreeing to a $1 trillion financial lifeline for the euro region, ministers are under pressure to show they can reduce deficits fast enough to satisfy investors and then police budgets effectively once targets are met.

While Italy is following Spain and Portugal in announcing budget cuts, the drumbeat of skepticism about policy makers’ ability to end the crisis is getting louder. The euro dropped today to the lowest in more than four years against the dollar. The Euro Stoxx 50 Index on May 14 tumbled the most since March 2009.

“These are still measures taken under the gun,” said Marco Annunziata, chief European economist at UniCredit Group in London. “We need a credible strengthening of the euro zone’s fiscal rules to ensure discipline will be maintained after the immediate crisis is over.”

The European Commission said last week that it wants closer coordination and stricter rules, possibly including plans for euro-area finance ministers to submit spending plans to each other before their own parliaments vote on them.

Posted via email from Jim Nichols