Former ECB President Jean Claude Trichet has raised concerns about recent “relaxes in fiscal discipline” from governments in Europe, speaking to the Law Soc in UCD today.
Jean Claude Trichet’s comments come as the Irish government faces increased pressure from nurses and teacher unions for public pay restoration, having already agreed to a €50 million pay deal with Garda to avoid a strike.
The former head of the European Central Bank also warned of a potential global economic crisis, based on worrying rises in both public and private debt. The debt to GDP level he outlined, has continued to grow despite the re-adjustments taken in most advanced countries during the Eurozone crisis.
Trichet said that in 2000 the global level of debt over the amount of global GDP was 200%. The level of debt had risen to 225% by 2007 at the eve of the US and EU financial crisis. “
“You would expect that since the crisis we stopped that, you would be wrong” Trichet warned. “It continued at the same pace”.
By 2015 the level of debt to GDP was 300%. The continued rise in the world’s economic debt bubble has been inflated of late by the emerging economic powers such as China and India.
But Trichet warned that China’s debt problems are very much Europe’s debt problems. “We are in a global economy; we know that we are all interconnected”.
“Perhaps when we will have the benefit of the hindsight in ten or fifteen years. We will say there was the advanced economic crisis in 07/08, and then we had the global economic crisis in …. I don’t know when.
“I’m not re-assured when I look at that indicator” of global debt to GDP Trichet warned.
Speaking in the Fitzgerald Chamber Trichet criticised countries or politicians who look to leave the EU single market. Trichet outlined that all the growing economic powerhouses in the world were single markets with a single currency; the US, China, India. “You have enormous amounts of populations, economies, that are now growing extremely fast. The idea that it is time for European’s to get back to their own nations and to leave the EU, seems to be contrary to common sense”
Talking to the Tribune after the event Jean Claude Trichet would not comment on Ireland’s potential exposure to Britain’s exit from the EU common market.
The former ECB head stated that “it is the problem of the United Kingdom, crucially, to elaborate more on that [Brexit]. When they start to say what exactly they want”, then he outlined countries might know more as to how it will affect them.
Trichet was presented with an honorary lifetime membership of the Law Society in UCD, by current Law Soc auditor Aodhán Peelo.
Jack Power | Editor