“We need to take difficult steps in order to get to sustainable and lasting economic recovery”, suggested George Osborne, Chancellor of Exchequer, on 10th of May at the G7 meeting.
The markets are considered to be calm thanks to the measures taken so far but, in order to enjoy this calm, further preventive measures are required. Since the priorities have been set, monetary activism, fiscal responsibility and structural reform, there is left the implementation. The last fashion in the matter of monetary policy is the Quantitative Easing. Countries as United States, England and Japan are already establishing a strong trend which seems to be the answer for Euro zone as well.
After highlighting the fundamental need of structural reforms, the conference continued with the idea of a plan which actually exists and offers the answers for more productive economies, increasing investments and noticeable more jobs crated. This plan has a simple structure and requires the governments’ focus on free trade, changing the tax system which should support more the global investments and working on the weaknesses of the banking system which should make lending more accessible. It has been clearly mentioned that the fiscal and monetary policies of G7 countries don’t target the exchange rates (as mentioned in February) and an important attention will be given to tackle tax avoidance and evasion. Maybe the most important part of all the discussions refers to the steps needed in order to establish a banking union in Europe. Since the steps have already been discussed, we received the necessary assurance to think at the bank union as of the key of the European crisis, a measure which will be accomplished soon.
A warning signal was pulled for Britain, which seems to be the slowest country from G7 (apart from Italy) concerning the economic recovery. There are voices saying that Britain needs to make changes in its policy in order to maintain the stability. Moreover, the idea of stepping out of the European Union is not passing positive signal to the investors. Even if this action has a very low probability of being accomplished, on the short term it may have serious effects (as deterring investments). As Prime Minister David Cameron promised to hold a referendum in 2017 and also renegotiate the relationship with European Union, politicians think that earlier measures need to be taken.