Bankers, policymakers say Europe's crisis not over

Sat Jan 26, 2013 7:11am EST
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By Emma Thomasson and Alexander Smith

DAVOS, Switzerland (Reuters) - International bankers and finance ministers warned on Saturday that Europe's crisis was not over even though the euro currency is now stabilized, it will take years to overcome economic malaise and mass unemployment in Europe.

After a private meeting of leading commercial bankers, government officials, central bankers and trade union officials, Swedish Finance Minister Anders Borg told Reuters: "There is a clear divide between the financial markets, who think a lot of this is fixed, and the people in the real economy and particularly from our side as the governments."

Unemployment in Europe would only fall from 11.8 to 11.7 percent this year, growth was stagnant, real wages were not rising in most countries and it would take countries such as Sweden and France years to reform their labor markets, he said.

"So it is very dangerous to declare that the crisis is over because that would undermine the crisis insight that we need to have among the companies, among the population, among the unions, to be able to go through this process," Borg said.

Sweden is not a member of the 17-nation euro zone and Borg has been among the strongest critics of the bloc's handling of its sovereign debt crisis since late 2009.

International Monetary Fund Managing Director Christine Lagarde and Deutsche Bank co-chief executive Anshu Jain, who co-chaired the closed-door meeting on the sidelines of the World Economic Forum in Davos, declined to speak to reporters.

Participants said the mood this year was far more relaxed than 12 months ago, when there was a sense of emergency about saving the single currency from break-up.

European Central Bank President Mario Draghi left Davos for home before the meeting and EU Economic and Monetary Affairs Commissioner Olli Rehn, who was in Davos, did not attend.   Continued...

Sweden's Minister of Finance Anders Borg speaks during the international conference "Against The Odds: Lessons From The Recovery In The Baltics" in Riga June 5, 2012. REUTERS/Ints Kalnins