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Rehn defends Eurozone’s austerity policy

European Commissioner for Economic and Monetary Affairs Olli Rehn spoke against the critics of budget cutting measures recommended by the European Union in an interview published today in a Finnish newspaper.

Rehn responded to voices of such economists as Paul Krugman who suggest that Brussels should stop reducing spending and encourage the most indebted countries to stimulate their economies, instead of making them believe that this is a way to regain market confidence.

The disagreement sprang up after the European Commission published various projections which pointed to a deeper and more prolonged recession in the countries in the south of Europe, which are implementing harsh austerity measures.

Olli Rehn believes that the experts who agree with Krugman distorted the results of a study carried out by the IMF in 2012 regarding the consequences of austerity, which said that the impact of spending cuts on growth could be greater than expected. According to the commissioner, “It is essential that the IMF paper does not give rise to the conclusion that economic adjustment would not be desirable” and that is why he believes that the critics are putting forward their own interpretation in order to attack the Eurozone policy.

Rehn assured that he expects “people who are more intelligent” to present alternative and realistic propositions in order to improve the flow of credit in Europe, as until now this did not happen yet.

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