European ‘Squabbling’ to Last for Years, Teachers’ Leech Says
Europe will see annual economic growth of zero to 1 percent for a decade as it works out its fiscal and structural issues, said Jim Leech, chief executive officer of the Ontario Teachers’ Pension Plan.
“They are going to be squabbling about this in the family for years to come; they are in such a mess,” the head of Canada’s third-biggest pension fund said today at a Toronto Board of Trade event that recapped last month’s World Economic Forum in Davos, Switzerland.
“There was clearly Euro-fatigue in Davos,” said Leech.
The MSCI World Index (MXWO) gained 9.8 percent this year through yesterday as Greece negotiated a 130 billion euro ($175 billion) rescue package with European officials. The euro currency rebounded from a 16-month low reached Jan. 15.
Europe must become more competitive, and its economy must grow faster to resolve the crisis permanently, said Bank of Montreal (BMO) Vice Chairman Kevin G. Lynch.
“We’re not at the beginning of the end; we’re at best at the end of the beginning of sorting it out,” Lynch said, quoting Winston Churchill. “We’re going through a very long period of adjustment in the European context.”
Economists forecast the euro region’s economy will contract 0.4 percent this year, according to the median estimate in a Bloomberg survey.
Leech and Paul Smyke, a special adviser to the chairman of the World Economic Forum, said some Davos attendees were more optimistic about the U.S.’s fiscal situation. Both Democratic and Republican members of Congress privately agreed on the need to reduce tax loopholes and cut spending, Leech said. The politicians said no such plans will pass before November elections, according to Leech.
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