Belfast Telegraph

Turmoil threatening EU recovery, warns Rehn

By Staff Reporter

Recent turmoil on financial markets is threatening economic recovery in the European Union, the bloc's leading economic official has said.

The warning from EU Monetary Affairs Commissioner Olli Rehn came after a turbulent summer for markets across the globe as investors worried about a potential new recession in the United States, the eurozone's ability to resolve its debt crisis and the health of European banks.

"The financial markets and the real economy move now more in synchrony, which makes me seriously concerned about continued financial turbulence spilling over to, and potentially harming, the recovery of the real economy," Mr Rehn told MEPs.

That statement is a sharp turnaround from comments in recent months when he said growth in the EU was strengthening despite the market jitters.

As a result, the European Commission now has a bleaker view of EU economic growth than this spring, Mr Rehn said. Back then the Commission, the EU's executive arm and economic watchdog, predicted the 27-nation bloc would grow 1.8% this year.