By Martin Banks - 8th August 2011
The markets seem to have no faith in the recent bailout
Marta Andreasen
UK Independence Party MEP Marta Andreasen has rubbished recent comments about developments in the eurozone by EU commissioner Olli Rehn.
The attack comes after Rehn, the economic and monetary affairs commissioner, said that Italy was doing what it should to boost economic growth and consolidate public finances.
Italy's stocks and bonds came under heightened attack last week in a selloff triggered by the eurozone's debt woes and fears of a global economic slowdown.
Rehn said that he remains convinced that the Italian authorities are doing what is necessary to put the country back on track for higher sustainable growth and ensuring fiscal consolidation.
But Andreasen, a former commission chief accountant was less than impressed, saying that Rehn's response to falling investor confidence in the financial markets "showed how out of touch the EU is with economic realities.
"The markets seem to have no faith in the recent bailout and little faith in the eurozone in general. This is hardly surprising.
"Rehn basically had nothing to say other than 'stick by us'. The trouble is investors are beginning to see efforts at saving the Euro as akin to flogging a dead horse."
Further criticism of EU economics policy came from her party colleague and UKIP leader Nigel Farage.
Responding to recent sharp stock market falls, he said, "The stock markets are in free fall to a large extent because of the financial crisis caused by the euro currency.
"Countries like Greece, Portugal, and Ireland have necessitated bailouts to protect German and French banks and the euro currency. Spain and Italy are too big to bail.
"Financial experts know this, see the problems it creates for European economies in general and are selling their stocks as quickly as they can. The euro currency is like a sinking ship which is pulling down many tugs with it. It is time to cut the ropes that bind."
Meanwhile, the UK-based think tank, Open Europe, which campaigns for reform of the EU, has pitched into the debate, warning that fears over the viability of the euro are likely to continue.
A spokesman, Raoul Ruparel said, "Fears over the eurozone debt crisis have sent markets into free fall over the last few days, and although recently announced US employment data may give markets some short-term reprieve, these fears are likely to continue.
"At the heart of this crisis is one simple, but yet politically hugely complicated problem: the eurozone is left without a lender of last resort."
He added, "EU leaders agreed on 21 July that the eurozone bailout fund – the EFSF – rather than the European Central Bank, should have the mandate to act as the backstop and provide cash for struggling governments and banks.
"However, they did not equip the EFSF with the necessary cash to do so, due to political constraints, leading to huge uncertainty on the markets with EU leaders sending out mixed signals. Therefore, the deal may in fact have made things worse in the short-term."
He went on, "This illustrates the impossible choice that the eurozone faces between appeasing markets that want more fiscal union and ignoring voters who strongly oppose it."
