Scholz for EU capital markets union, ECB says rate cuts require slower wage growth
Business
Says the single market is far too fragmented, especially when it comes to financial issues
BERLIN/AMSTERDAM (Reuters/Web Desk) – German Chancellor Olaf Scholz called on Sunday for the European Union to complete its creation of a banking and capital markets union so the bloc can compete with the US and China for new technologies.
Scholz told a conference in Berlin for European delegates of his Social Democrats (SPD) party that this was a key issue for economic growth and the creation of jobs in Europe.
The single market is far too fragmented, especially when it comes to financial issues, which is why the EU, with more than 400 million inhabitants, is unable to make full use of its power, he said.
"That's why we need to complete the European project so that European companies can rise," Scholz said.
The plan to create a single market for capital has been on the table since 2015 without any real progress.
Scholz also called for a minimum tax rate for companies of 15% to be introduced in all EU countries. "Isn't that possibly also the basis for the banking and capital markets union to work?" he asked.
There has been concern that banks would choose to be based in an EU country with very low taxes "and if things go wrong, all European taxpayers will have to pay," Scholz noted.
The heads of EU institutions called for a strengthened euro and progress towards a capital markets union in a joint appeal in December.
SNAPPING THE TRICKLE DOWN EFFECT
The European Central Bank (ECB) will need to see proof of slowing wage growth in the euro zone before interest rates can be lowered, ECB governing council member Klaas Knot said on Sunday.
"We now have a credible prospect that inflation will return to 2 per cent in 2025. The only piece that's missing is the conviction that wage growth will adapt to that lower inflation", the Dutch central bank governor said in an interview with Dutch TV programme Buitenhof.
"As soon as that piece of the puzzle falls in place, we will be able to lower interest rates a bit."
ALIENATED ELITE
The statement comes as the European nations are witnessing a shift towards the ultra-right forces which have been using the worsening economic inequality as a tool to expand their reach among the people who have been hit hard by the cost of living crisis triggered and sustained by high inflation and interest rates.
Read more: France steps up security as Paris farmers protest looms
Hence, it is another proof of the elite being disconnected with the ground realities and making decisions which are damaging to liberal democracies, thus providing an opportunity to the nationalist forces and foreign powers like Russia to exploit the situation.
Both France and Germany have recently seen farmers protesting and marching towards their respective capitals, forcing the governments to partially reverse the planned subsidy cuts.
In Germany, the government had especially warned about the possibility of AfD and other ultra-nationalists using the situation to their advantage and the protesters becoming violent.
However, the elite bankers and economic experts remain fully focused to the “principles read in books” and not listening to the people’s demands.
