UNICE chief: interest rate cuts won’t boost growth

Date: 22/09/05

Cutting interest rates will not help Europe regain its place on the global stage, the head of Europe's business organisation Ernest-Antoine Seillière has said.

Some industry representatives have called on the European Central Bank to cut interest rates to stimulate growth, but the new chairman of UNICE said that slashing rates was not a long-term solution.

"My contact with business circles shows that lower rates would not be the shock needed to restart growth," Seillière told journalists in Brussels. "It is not the price of oil or interest rates that will lead to growth in Europe, it's the capacity of businesses to adapt."

The Frenchman also expressed concern about the effect that the confused outcome from the German elections could have on the ability of Europe's largest economy to reform. "It doesn't help," he said.

He said that he was "shocked" that the EU leaders had failed to take hold of the reins to lead Europe following the two 'No' votes on the EU constitution, in France and the Netherlands.

"As businessmen, we can not understand, when such a serious situation has been created, why no effort is immediately made to mitigate its effects," he said.

While he did not believe that the rejection of the EU constitution in two of the Union's founding member states would jeopardise the single currency - "it is unthinkable that we should be talking about the destruction of the euro" - Seillière said that the coming years could be a "process of going backwards if we don't take action".

"We are not necessarily worried about companies because they are used to dealing with a particular climate, so it is less of a UNICE problem than it is a problem for the citizenship of the EU," he said.

The constitution, he added, would have been a positive step for Europe.

"The social model can only be achieved by a growth process supported by good governance. If we have 25 member states we need to technically improve the procedure, because companies know that if the governance is not adapted to the situation, it is difficult to get a result."

Comments by the new President of European business organisation UNICE, Ernest-Antoine Seillière, who said that cutting interest rates, a move called for by some industry representatives, was not a long-term solution. Seillière also commented on the rejection of the Constitutional Treaty for Europe in France and the Netherlands and the recent Parliamentary elections in Germany.