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FINANCIAL CRISIS

Borg warns of pump priming debt mountain

Sweden's finance minister Anders Borg warned EU leaders on Thursday that states cannot keep throwing good money after bad and called for a discussion to supervise the easing of expansionary fiscal policy.

Borg warns of pump priming debt mountain

Gothenburg will host the Ecofin Council meeting of European Union finance minsters and will be chaired by Anders Borg, representing the current EU chair Sweden.

“We are seeing a tentative recovery, obviously based on the very strong fiscal stimulus, monetary stimulus that we are now implementing,” Borg said before the meeting in Gothenburg on Thursday.

“Obviously then we would have to discuss the exit strategies. Even if the policy would have to remain expansionary it is necessary to start to design and communicate the exit strategies,” Borg added in reference to preparations in the autumn to return to a more balanced fiscal situation.

The leaders however were reluctant to put any fixed dates for a coordinated exit strategy to tackle bloated deficits.

“I think it is very difficult. I don’t think that the implication of this international crisis is a symmetric one for each of the countries,” said Portugal’s finance minister Fernando Teixeira dos Santos.

“It’s affecting every country differently. And every country will have to define its own exit strategy in its own time. I don’t think we can have a precise schedule or a common schedule,” he added.

With recovery set to remain “fragile and flaky” into 2011, according to Jean-Claude Juncker, Luxembourg Prime Minister and head of the 16 countries that use the euro, weak growth potential is holding states back from early withdrawal of massive stimulus funding.

The International Monetary Fund warned on Thursday that the fiscal legacy of the global crisis is “a high and rising (national) debt trajectory that could become unsustainable without significant medium-term measures.”

A spiralling drain on public finances also amounts to a political conundrum for leaders facing hard-pressed voters at home.

With millions of jobs already lost and amid further fears of rising inflation, Anders Borg, said economic policy would still be “very expansionary in the coming period.”

Twenty out of the 27 EU countries will be operating in the coming period above the bloc’s threshold for deficits, originally pegged at three percent of Gross Domestic Product.

Among the heaviest is France, which this week indicated in its new budget that its public debt will soar to 84 percent of national output in 2010, again well above the theoretical 60 percent limit agreed when setting up the euro.

Warning that states cannot keep throwing good money after bad for ever, Borg said the threat of 100 percent debt levels for the biggest countries in a few years’ time was of major concern.

“The crisis will have a negative impact on potential growth, so we need to boost labour supply and boost labour market flexibility to increase the potential growth of the European economies,” he added.

He said that making a “timely withdrawal of the temporary stimulus,” designed and communicated in advance, held the key.

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WORK

Educated Greeks flock to Sweden to find work

The deep financial crisis in Europe has led to more Greek citizens arriving in Sweden to seek employment, with twice as many coming 2011 compared to the year before.

Educated Greeks flock to Sweden to find work

”We have a lack of engineers here; there are not enough university trained engineers in Sweden to cover the demand,” said Peter Karancsi, of the European Job Mobility Portal EURES to Sveriges Radio (SR).

Fresh figures from the Swedish Migration Board (Migrationsverket) show that the number of Greeks registering as residents in Sweden doubled in 2011, compared to the year before.

And according to SR, almost 100 Greek medical doctors have received medical licenses in Sweden so far this year, more than from any other EU country outside of Scandinavia.

“I have a better chance fo getting a job here than in Greece,” said electrical engineer Charis Katsakakis, just arrived from Athens, to the broadcaster.

And despite being a recent graduate and not knowing any Swedish, his prospects of finding work in Sweden are good, Karancsi told SR.

“Many of the larger Swedish companies have trainee-schemes and also recruit for the future and there is a great chance of being accepted to these, even if you don’t speak fluent Swedish,“ he told SR.

However, for those without specialized knowledge, the situation is quite different.

“Everything felt hopeless in Greece, but it is no better here. And then I’d rather go home,” said 25-year-old Vladimiros Pavlides to SR.

Pavlides arrived in Sweden last autumn but has so far only managed to find a part-time job as a cleaner.

According to SR, the free movement over EU borders makes little difference when the labour market climate for those without specialized expertise is a lot tougher.

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