Euro crisis is chance for budget consolidation – German chems

09 June 2010 18:48  [Source: ICIS news]

TORONTO (ICIS news)--The eurozone currency and debt crisis offers a chance for much-needed government budget cuts and consolidation, Germany’s chemical employers group, BAVC, said on Wednesday.

Almost all euro countries - not just Greece - required budget consolidation and needed to ensure they were not living beyond their means, the Wiesbaden-based group said.

“This [the crisis] offers the chance to build up the eurozone for the future, instead of talking about the euro’s end,” the group said.

BAVC comments came as Dutch voters were poised to favour a pro-business party, the People’s Party for Freedom and Democracy (VVD), in elections on Wednesday. The VVD has spoken out for budget cuts and other government savings measures.

Earlier this week, Germany’s coalition government under Chancellor Angela Merkel put forward an €80bn ($95bn) budget cut package - a move that was broadly welcomed by the country’s chemical producers, albeit with some reservations.

BAVC said the eurozone was worth defending, especially for Germany’s industrial producers.

The common currency had created market transparency and given firms a reliable basis for their production and investment plans, the group said. Firms were no longer struggling with exchange rate risks, but rather saved on the costs for currency hedges and other precautions, it said.

Also, the euro had much strengthened the political weight of the old continent vis-à-vis international competition, the group said.

In a recent interview, BASF chief executive Jurgen Hambrecht also came out as a strong supporter of the euro.

However, last month, a prominent former German business leader said the country should consider leaving the euro.

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By: Stefan Baumgarten
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