Europe now an 'emerging country', Davos hears

DAVOS, Switzerland - Top bosses and economists warned the global elite on Wednesday not to get over-excited by a gradual economic upturn in Europe, which one chief executive branded an "emerging country."

While the mood of impending doom surrounding the eurozone that stalked Davos at the height of the crisis has abated, staggering rates of youth unemployment and sluggish growth are still battering Europe, delegates heard.

Christophe de Margerie, head of French energy giant Total, said: "Don't take it as being provocative (but) I think Europe should be reclassified as an emerging country."

The continent needs to start from scratch in terms of economic policy to overcome the twin evils of high unemployment and stagnant growth, he added.

Meanwhile, Axel Weber, head of Swiss banking group UBS and a former head of the powerful German Bundesbank, stressed: "The eurozone recovery is no reason to get excited.

"If you actually look at the recovery, it's lacklustre, it's uneven across European countries...this is not enough to close output gaps, it's not enough to create jobs."

Speaking at the same panel, respected Harvard University economist Ken Rogoff said the youth unemployment situation in Europe was "really frightening."

With more than one in two young Spaniards out of work, "you're losing part of a whole generation," he warned.

After years of recession caused by a crippling debt crisis, the eurozone economy is gradually beginning to recover, although concerns persist about certain countries, notably France.

Rogoff derided the creation of the single European currency, the euro, as a "giant historic mistake".

Nevertheless, he acknowledged that the 18-member bloc had become more stable since last year's gathering of the world's elite at Davos. "No one is talking about the eurozone falling apart. I don't think it's a small political achievement...I think Europe deserves credit for that."

 

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