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TheStreet Open House

US Treasury Chief Urges EU To Ease Off Austerity

By JUERGEN BAETZ

BRUSSELS (AP) â¿¿ 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 Unites States has no bigger, no more important economic relationship that it does with Europe."

Lew, who became treasury secretary in February, started his first official trip to Europe with a meeting with EU Commission President Jose Manuel Barroso. He also met the EU's top economic and monetary official, Commissioner Olli Rehn, and EU Council President Herman Van Rompuy.

"I was particularly interested in our European partners' plans to strengthen sources of demand at a time of rising unemployment," he said, speaking alongside Van Rompuy.

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 European economies face a high level of debt, deep structural medium-term challenges and short-term economic headwinds that we need to confront," he said. "There is no room for complacency."

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

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