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Trichet doesn't see Deflation

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http://www.guardian.co.uk/business/feedarticle/8041551

 

ECB's Trichet-UK must respect EU budget rules

Reuters, Tuesday November 18 2008 (Adds quotes, background)

By David Milliken and Kirsten Donovan

LONDON, Nov 18 (Reuters) - The British government must respect European Union budget rules when considering a fiscal stimulus plan to lift the economy, European Central Bank President Jean-Claude Trichet said on Tuesday.

Answering questions at an event organised by the Daiwa Anglo-Japanese foundation in London, he also said that the euro zone economy was not in a deflationary situation.

Asked his views on British Prime Minister Gordon Brown's plans to borrow to boost public spending in an effort to avert a deep recession, Trichet said: "All I can say is that the UK as well as (euro zone countries) ... are members of the EU and therefore members of the Stability and Growth Pact."

The pact limits national budget deficits to 3 percent of gross domestic product.

Trichet also said he saw no sign of deflation in the euro zone.

"We are not in a situation that characterises deflation. If I look at some facts and figures, I don't see yet any trace of deflation or negative inflation," he said.

It is important to distinguish between disinflation and deflation, Trichet added.

He stressed that confidence is essential as the world grapples with the effects of the financial crisis.

"Economics is complex and confidence is of the essence ... At a global level, confidence is the thing that is lacking most," he said.

Countries on both sides of the Atlantic were doing what was necessary to manage the financial crisis, he said.

Stressing he was not referring to any particular country, Trichet said that if that a country people lacked confidence in its public finances, then fiscal stimulus was likely to prove ineffective. :lol: :lol: :lol:

Brown's government is expected to announce unfunded tax cuts in its pre-budget report on Monday as part of its efforts to mute what is expected to be a deep and prolonged recession in Britain.

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Blimey I can't imagine there was much agreement at the G20....Trichet seems completely opposed to the UK/US version of events...seems to completely understand the 'pushing on a string' problem.

 

 

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Well guess what Gordon Brown used the "D" word on Monday - deflation that is

 

Here's a report from that erm "excellent" newspaper THE SUN :lol::lol::lol:

 

http://www.thesun.co.uk/sol/homepage/news/...icle1942465.ece

 

 

Hmm Brown is siding with the Americans not the Europeans.

 

If we get a Sterling crisis who will bail us out?

 

The Americans? Not likely

 

The Euros Not likely - especially not now - you can take Trichet's comments and Brown's comments as being a mutual "up yours" directed at each other

 

Possibly Brown is being backed into a hole and doesnt want to admit exactly the kind of mess we are in, as that will reflect badly on him. Whatever bailout plan he has got planned/coming might be the last throw of the dice.

 

We are on our own folks.............

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...The Euros Not likely - especially not now - you can take Trichet's comments and Brown's comments as being a mutual "up yours" directed at each other

 

...

 

We are on our own folks.............

 

So little chance of swapping the pound for Euro if we get to a 1:1 then ;)

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