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U.S. to EU: Ease off austerity

Treasury Secretary Jacob Lew prepares to meet with

Treasury Secretary Jacob Lew prepares to meet with EU officials in Brussels on Monday. He urged a shift in focus from debt reduction to growth-friendly policies. Many EU nations are in recession. (April 8, 2013) Credit: AP

BRUSSELS - European countries should ease off their austerity and adopt more growth-friendly policies, U.S. Treasury Secretary Jacob Lew said Monday as he kicked off a series of meetings with the region's top leaders.

America's biggest trading partner and the world's largest economic bloc has entered the fourth year of a debt crisis, which has plunged many of the 27 EU nations into recession. The U.S. administration hopes Europe will relent in its focus on debt reduction, which has been hurting growth through spending cuts and tax increases.

"Our economy's strength remains sensitive to events beyond our shores, and we have an immense stake in Europe's health and stability," Lew said in Brussels. "The United States has no bigger, no more important economic relationship that it does with Europe."

EU Council President Herman Van Rompuy, who chairs the meetings of the EU's 27 heads of state and government, acknowledged "there is a vivid debate about fiscal policy and the pace of fiscal consolidation" but defended the bloc's economic policy as a necessity.

The bloc's strategy of debt reduction has become increasingly controversial also within Europe, as many nations experience rising unemployment and falling economic output -- which in turn increases their debt load measured relative to annual gross domestic product.

Van Rompuy hinted, however, that the EU is willing to grant its member states some more leeway. It has, for example, given some countries more time to reach deficit targets.

Lew's two-day trip through some of Europe's capitals is his second tour abroad after visiting China last month.

Lew said he and the EU officials also discussed the planned free trade agreement between the United States and the EU, saying it "reflects our strong belief that our economic relationship can be even more productive as a source of trade, jobs and growth."

That deal would foster growth by lowering tariffs and removing other trade barriers for most industries. The project has strong support on both sides of the Atlantic, with President Barack Obama and German Chancellor Angela Merkel amid its prime advocates, but the negotiations are expected to be arduous.

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