News / Interviews

EU policies to revive economy ineffective: Academic

Friday, 05 February 2016 10:15 AM [ Last Update: Friday, 05 February 2016 10:15 AM ]

A picture taken on June 29, 2015 shows Drachma bills, Greece’s former currency, next to euro bills and coins. (Photo by AFP)

Press TV has conducted an interview with Jack Rasmus, a professor of political economy, about the state of the European economy.

The following is a rough transcription of the interview.

Press TV: How do you sum up the current status of Europe’s economy?

Rasmus: Well, it’s been a year since Europe engaged the European Central Bank in its QE policy, which was really designed to drive down their currency, to get them an export advantage; in other words, it was an export-driven economic growth strategy, but it hasn’t worked.

It hasn’t worked because the rest of the global economy is slowing down in terms of trade and exports. And now, we have Japan preempting the eurozone and dropping its currency with its negative interest rates. Now we have emerging markets everywhere in trouble and their currencies are declining.

So, the whole idea of grabbing economic growth through exports and declining export environment has not worked. That’s the main reason why... The other reason is that the banks just started lending for real job creation investment activities. There’s probably... my estimate at 1.5 trillion dollars in equivalent dollars in euros of non-performing bank loans and that overhang is preventing some real investment going on. I think those are the two main problems why we’ll not really get much growth out of Europe and we will probably get less going in through the rest of the year.

Press TV: And how much would such a sluggish economy have an impact on what many say [is] the possible break-up of the European Union?

Rasmus: Well, I don’t think it’s anywhere near the point where the economic stresses will result in a breakup; although, we can see Britain with its attempt to exit, if it does have this vote and Britain does exit, that could certainly have a multiplying effect on other countries as well.

Of course the immigration is putting great strain on their economy and that’s not positive either. So, the forces are growing towards more of a breakup, but I think it wouldn’t be a breakup with the European Union; I think it would be more certain countries not participating in the monetary union.

Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.co.uk