US Treasury chief urges strong EU countries to aid growth
US Treasury Secretary Jacob Lew urged Europe's strongest economies to help spur growth after talks Tuesday in Germany, the eurozone's austerity champion, as Portugal and Cyprus provided the latest headaches.
Stressing that the United States had an "immense stake" in a prosperous Europe, Lew told reporters in the bloc's biggest economy, on a tour of eurozone capitals, that consumer demand was the driver of economic growth.
"Policies that would help to encourage consumer demand in countries that have the capacity would be helpful," he said at a joint press conference with German Finance Minister Wolfgang Schaeuble.
The Treasury chief, on his first European trip since taking over the post from Tim Geithner in February, is also due in Europe's second top economic power, France, later on Tuesday.
He has already taken in Brussels and Frankfurt.
Germany has weathered the eurozone's financial turbulence relatively unscathed despite a dip at the end of last year, and as Europe's effective paymaster, its partners have looked to Berlin to provide crisis leadership.
The US official's maiden European tour comes as Portugal scrambles to find new spending cuts after the Constitutional Court rejected a number of austerity measures, and hard on the heels of an emergency bailout for cash-strapped Cyprus.
Auditors from Portugal's international creditors are to make an extra visit to the country in the coming weeks after the court ruling, which has complicated its efforts to qualify for funds under its 78-million-euro ($102 million) rescue.
After their talks in the German capital described by Schaeuble as "intensive" and "friendly", the two finance chiefs sought to play down differences.
"I think we share a commitment to growth and we share a commitment to fiscal discipline," Lew said.
But he again took the opportunity to stress the importance of a strong Europe for the US.
"As we continue to address many of our long term challenges, our economy's strength remains sensitive to events beyond our shores," Lew told reporters.
"In particular, we have an immense stake in a strong and prosperous Europe," he said, reiterating remarks made in Brussels on Monday.
EU leaders have struggled to chart a consistent path marrying German-led demands for austerity with calls to invest for growth, a subject set to feature when G20 leaders gather in Russia later this year.
However Schaeuble told reporters that "nobody, also in Europe, sees this contradiction between fiscal consolidation and growth".
"We have a common position, growth-friendly consolidation or sustainable growth, whatever one calls it," he added.
Asked whether faster fiscal consolidation in the United States would be helpful to the eurozone, the German minister stressed that European countries had enough on their plate working together on a common position.
"We ourselves in Europe have enough to explain why Europe is as it is," Schaeuble said.
Ahead of Lew's trip, a top US Treasury official, who spoke on condition of anonymity, had said it was "vital" to see rebalancing within the euro area.
The official called for surplus economies to contribute more to demand in order to ease adjustment in the periphery, "avoid austerity fatigue and renew Europe's economic vibrancy."
During his talks in Brussels with top EU officials, including EU President Herman Van Rompuy and European Commission head Jose Manuel Barroso, Lew had stressed the US's major interest in Europe's recovery and reform efforts.
Washington is taking a keen interest in EU plans to develop an integrated banking union across the 17-state eurozone, to parry the risk of a bigger crisis than the one in Cyprus where banks went into lockdown amid fears of international capital flight.
A banking union is "critical to ensuring the long-term stability of the euro area," Lew told reporters here.