Euro zone needs action, not finger-pointing: Swan

World leaders have ‘absolutely no excuse for failure’ in managing the euro-zone crisis.

WORLD leaders have ”absolutely no excuse for failure” in managing the euro-zone crisis and must deliver a bold and credible plan at this weekend’s summit in Brussels, Treasurer Wayne Swan told an Austrade business luncheon in London overnight.

He said the outcome was important for Australia because it was not immune from Europe’s troubles. ”In spite of our strong fundamentals and tiny exposures to European banks, we shouldn’t kid ourselves that our economy isn’t already being hit by what’s happening here, or that it can’t be hit harder.”

He said the crisis had made the target of surplus by 2012-13 more difficult to achieve: ”The impact on confidence alone has had consequences for our own growth and budget revenue, and there is every prospect this could get worse if we accept ? that the extreme volatility of recent months is likely to continue for some time yet.”

He said traditional policy arsenals were depleted, and political divisions mired efforts to overcome problems on both sides of the Atlantic.

But he was confident that European finance ministers understood the seriousness of the threat and the need for political unity. But they needed to make more progress on Europe’s bailout fund, tackle debt levels and develop a plan to recapitalise the banking system.

”We know what is happening, we know what needs to be done, and we have a good understanding of the consequences if only half-measures are applied. We know that Europe needs to regain the confidence of markets. It needs to get its house in order and it needs to do this now by setting out credible plans for fiscal consolidation [reducing deficits and debts] ? The time for half-measures, the time for finger-pointing has long passed.”

Mr Swan said Prime Minister Julia Gillard would take the same call to action to a meeting of G20 leaders in Cannes in November. ”The world can ill-afford further hits to confidence,” he said.

Mr Swan also said the US should get its budget in order. ”There needs to be a concerted effort to support growth quickly and create jobs for the millions of US unemployed ? we still need the major components of President Obama’s jobs bill passed in some form.”

Speaking to BusinessDay before his speech, Mr Swan said millions of people ”depend on European leaders getting their skates on”.

First published in The Age.


He will also meet British Chancellor George Osborne and Bank of England governor Mervyn King.