OECD’s White Says Europe Needs Structural Reforms: Tom Keene
Debt-ridden European countries such as Ireland need “structural reforms,” according to William White of the Organization for Economic Cooperation and Development.
The 16-nation euro has fallen 9.2 percent this year, the most in Bloomberg’s Correlation-Weighted Currency Indexes’ measure of 10 developed-nation currencies, amid concern a sovereign-debt crisis will spread through the region as nations struggle with budget deficits. The European Central Bank today delayed withdrawal of emergency liquidity measures as President Jean-Claude Trichet pledged to fight “acute” market tensions.
“The problems in Europe, particularly in the periphery countries, have a lot to do with the need for structural reforms,” White, chairman of the OECD’s Economic and Development Review Committee, said in an interview today on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene.
Ireland, which received an 85 billion-euro ($112 billion) bailout package from the European Union and International Monetary Fund last month, will need to pay 6 percent interest on bonds for the next seven to eight years, he said. This will place a “huge burden” on Irish taxpayers.
Monetary and fiscal policy makers will need to further consider the long-term implications of such matters as near-zero interest rates in Japan and the U.S. and increasing budget deficits, such as in the U.S., White said.
The Bank of Japan in October lowered its key interest rate to a range of zero to 0.1 percent, while the benchmark U.S. interest rate has been a range of zero to 0.25 percent since December 2008. The U.S. reported on Oct. 15 its second-largest annual budget deficit, $1.29 trillion, for the fiscal year ended Sept. 30.
The 33-nation OECD is based in Paris.
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