Rehn says Eurozone must act to avoid split

BRUSSELS - Agence France-Presse

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European leaders must anchor their actions in more austerity if the eurozone is to avoid “disintegration” and “depression,” the EU’s economics commissioner Olli Rehn warned on yesterday.

With Spain facing imminent financial danger and Greece already tipped to possibly exit the single currency, Rehn said there are no shortcuts and that budget consolidation, reforms and some public investment hold the keys.

“To be frank, this is the case if we want to avoid a disintegration of the eurozone and if we want it to survive,” Rehn said.

‘Default to cause sorrow’

Rehn said that “default or disintegration” would likely cause much greater pain for Europe’s citizens than further unpopular austerity and reforms, as it “would lead to terrible depression in Europe and around the world”.

He said the solution remained “first, by staying the course of fiscal consolidation, second, undertaking structural reforms, and third, by boosting both public and stimulating private investment in order to provide fuel for the growth engine.” At this “critical” juncture for the euro, Rehn downplayed the merits of eurobonds, or shared sovereign debt.