US and Canada urge EU to take action over "insipid growth"

 
Billy Ehrenberg
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Lew cited "philosophical differences" between the Eurozone and the US (Source: Getty)

The US and Canada have urged the EU to do more to boost its flagging economy as Europe suffers from low growth and disinflation.

At the G20 meeting in Cairns, Australia, US treasury secretary Jack Lew warned that if "efforts to boost demand are deferred for too long there is a risk that the headwinds get stronger" and the EuroZone economy weaker.

Lew cited "philosophical differences" between the Eurozone and the US.

The EuroZone is seen as split between two blocs; the first, exemplified by France and Italy, wants to see stimulus measures adopted to boost demand and spark growth.

Germany has long been the patron of fiscal control.

The US and Canada want countries like Germany, that have trade surpluses, to use their strong economic positions to cut taxes and invest.

The ECB has made interest rates effectively negative and announced it was willing to increase its balance sheet by up to €1tn. So far reaction has been minimal, although it is seen to be too early to judge.

Figures released on 5 September showed the Eurozone didn't grow at all in the second quarter.

while the latest inflation statistics have CPI at 0.4 per cent within the sub-one-per-cent danger zone identified by Mario Draghi. The ECB has made interest rates effectively negative and announced

The European Central Bank (ECB) has a target of just under two per cent for inflation.

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