Axel Weber: Growth Stalled During German Elections

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Oct. 10 (Bloomberg) -- Axel Weber, chairman at UBS, talks about the slowdown of growth during the German elections and the risk of further shocks to the European economy and the global economic impact of a United States government default. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”


What will you be watching for, what is the catalyst to go back to economic growth?

I think it has been the same thing, to do the reforms needed to lift growth in europe.

Everything has been on hold, as he said, because of the german election.

It was a good excuse to not be in the headlines.

But there is no risk is now.

So europe has to face a growth agenda that what the name.

We needed at some point a write-down of bonds.

Can there be a process in order to the recovery of europe, or does the shock still linger?

I think there is a big risk that the shocks will disturb the european environment.

The rating action could be a big risk for europe out there.

The whole banking balance a stress test is going to be a key issue in 2014 if some banks failed to pass that and there would be the exit decision that not everyone would stay through, there has to be a backstop for those bangs, it is unclear that the money will come from the national government or from the european source.

So plenty of things to sort out up there, and no clear-cut answer.

There is no urgency.

It has been very, the market.

Is the ecb doing too much to help stability and, in the markets and papering over some of the fundamental problems in europe that have not been fixed?

Some of the action of central banks have helped in the crisis to restore confidence.

But of course they cannot do the long-term things that are needed in order to uplift the economy.

At some point, governments have to take over.

Central banks can build a bridge for the government to do the right thing.

Which long-term is needed.

If governments wait too long, if they do not do the right thing, central-bank action will run out of steam eventually and there is a big risk that that will happen.

Is very concept of united states and europe, or did that idea die with the crisis?

I think it is never been an idea in europe.

Sovereign nations i come together for economic reasons have been more the driver.

It is one more the association of states that maintain the economic levels, most responsibility nationally.

Some of that response ability has to be given up as we progressed to a more united europe, but it will be a slow process and it will not happen actively.

I see a more they to decade agenda rather than an imminent move.

On my agenda, axel, if the united states of america.

This morning, of course, tractor -- treasury secretary jack lew, 8:00 a.m., will be here in washington testifying.

He will be talking about the debt ceiling in this risk bumping up the october 17 deadline, which they have said they will maximize their borrowing authority.

Axel weber, what will be the impact of the u.s. gets past october 17 and they do not have a deal to raise the debt ceiling?

It is very likely that they will do another sort of deal like in january where there will be a suspension of the debt ceiling and then they will come together and try to talk more fundamental reforms.

Both parties are loggerheads over where to go, but for me, the real issue is every week that we have the government shutdown continue, it will take something out of growth for this year.

It is early in the quarter, so our estimate is .2% could easily be every week from first quarter growth, so the longer this takes, the more critical it becomes paired an economic team in the u.s. at ubs has been award winning bloomberg with their optimism.

That is where we work your wife i don't hear a lot of optimism.

Who is going to become the global growth injureengine?

I think europe will continue to move on average.

There will be growth just under 1%. it is a deeply divided growth between a core that will grow stronger than 1% and a periphery that is just coming out of recession.

A strong divide among europe's core and periphery.

I think growth in the u.s. will be around 3% next year.

It is around 1.6% this year.

That is largely due to some corrections that had been done early in the year.

From a u.s. perspective, we have not changed our pictures that the u.s. has taken a lead, however this fourth-quarter issue of the debt ceiling and of the government shutdown what is take a toll on growth every week . and covenants as well.

And confidence as well.

Ebbers exist to our twitter question of the date.

-- that takes us to our twitter question of the day.

We asked --is the united states the greece of 2013? some of the answers -- no, no one cares about greece.

Everyone cares about a u.s. he

This text has been automatically generated. It may not be 100% accurate.


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