The U.S. Treasury Secretary, Jack Lew, urged eurozone countries to “boost demand” while speaking at the third finance ministers and central bank governors meeting that took place on 20-21 September in Cairns, Australia, as part of the G20 talks. Boosting demand should, in his opinion, decrease joblessness and avoid deflation. Jack Lew’s speech came after the European Central Bank (ECB) had implemented further measures to stimulate the eurozone’s sluggish economic recovery. Yet, the ECB did not introduce the policies that are favored by its American counterpart, the Federal Reserve, in addition to launching an asset purchase program and cutting ECB benchmark rate to 0.05 percent.
According to Mr Lew, “Europe is going to need to solve its problems and resolve differences it has internally but what’s clear from the U.S. experience is that the combination of taking action to boost demand in the short run and implementing structural changes for the long run is an important one, and it should not become a choice between the two. “You really need to pursue both,” he emphasized. Mr Lew also pointed out that the political disputes that some European countries have between themselves may complicate pushing through necessary and urgent policies. “The concern that I have is that if the efforts to boost demand are deferred for too long, there is a risk that the headwinds get stronger, and what I think Europe needs is more tailwinds in the economy,” he warned.