EU calls for competitive markets to fight economic crisis

17 March 2009 13:34  [Source: ICIS news]

PARIS (ICIS news)--Competition, not protectionism, will help Europe fight its way out of the economic crisis, the EU competition commissioner said on Tuesday.

Speaking at a high-level conference on industrial competitiveness in Brussels, Belgium, Neelie Kroes said: “Flexible and competitive markets are crucial both on the way into a recession and to get out of it. So we aren't going soft on competition.”

Kroes also warned against “falling into the trap of trying to solve the problems by ‘beggar thy neighbour’ strategies”.

“When things are tough, it is tempting to try to steal economic activity from your neighbours, either by protectionism, defensive state aid or devaluations of your currency,” she told delegates at the conference.

“But the solution is not to have ‘buy American’ or ‘buy European’ or ‘buy Spanish’ clauses in our laws,” she said.

Instead, Kroes called for leaders to “fix the banks by clearing their balance sheets”.

She said this means “fully identifying and correctly valuing the impaired assets on bank books” so “we can decide how to restructure or wind down the banks”.

Kroes said leaders must also avoid offering citizens “quick fixes that don't exist” and instead work to maintain “competitive markets [that] offer the best chance of the best recovery”.

“Competitive markets are by definition hard work. But Europe needs modern industries, not museum industries – and museum industries are what you get if you insulate them from market signals,” she said.

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By: Philippa Jones
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