While Germany tries to calm the markets, Europe’s Commissioner for Budget, Günther Oettinger, has predicted that darker times lay ahead for the global economy.
“If we got out of (our) vacation in the late summer and thought the economy was booming as the number of jobs was rising, the stock market remained up, we had stability – let’s see (what happens) now that the party is coming to an end,” he said during a press conference on the EU budget in Brussels, suggesting that there is a risk that the markets may be entering into another crisis.
Oettinger pointed out that while the situation appears to be stable due to the decrease in the total amount of the EU Member States, he cautioned, however, that certain key international institutions, including the IMF, say that trouble appears to be on the horizon.
“The best years are behind us. We need to prepare for some frosty times ahead as the autumn sets in,” said Oettinger, who cited the politically and economically instability in Turkey, Brazil, Argentina, and Venezuela, as well as US sanctions against Iran as the main drivers behind the sudden market collapse, which will lead to a sharp increase in energy prices from November onwards.
Oettinger announced his response to the market volatility and the possibility of a recession by saying he would push for a mechanism in the next EU multi-year budget that would make access to European funds conditional upon the rule-of-law, a move that, according to Oettinger, has support in the European Parliament.
Oettinger hopes that the EU countries will find a way to agree on a multiannual financial framework ahead of next year’s elections to the European Parliament, adding that work at the ministerial level for European affairs and finance ministers is progressing.
“There will be enough time to postpone decisions to the appropriate conclusions by March, but even if we are unable to move forward with the whole package, partial decisions are important, for example regarding the maximum budget size, its structure, and the acceptance of programs,” said Oettinger, pointing out that although it is not necessary to complete all the implementation regulations for individual programs, the most important thing is that the pillars and frameworks of the decision regarding the multi-annual budget should be adopted.
“If we want a strong economy, we need solidarity in the EU. We need to have solidarity between rich and less wealthy countries, we need to be aware that some citizens need more help and support at the national, regional and local levels,” he argued.