Trump Policies Rattle European Central Bankers--Update
February 23 2017 - 8:41AM
Dow Jones News
By Todd Buell and Jason Douglas
Two top European central bankers had harsh words about the
economic policy coming from the U.S. in remarks Thursday.
The establishment of protectionist policies in the U.S. risks
undermining a key element to wealth, the head of Germany's central
bank said.
The blunt language reflects the concern felt across the globe
from policy makers as they try to make sense of President Donald
Trump's unconventional economic policy and political style.
"The U.S. erecting trade barriers leading to other countries
becoming more protectionist would, I firmly believe, potentially
call into question one of the key pillars of our prosperity," said
Jens Weidmann in the opening of the central bank's annual
report.
The new president's administration has angered many in Germany
by accusing Europe's largest economy of unfairly benefiting from an
undervalued euro.
Speaking in London Thursday, the ECB's chief economist, Peter
Praet, also expressed concern about the new U.S. administration. He
said some of the noises coming from Mr. Trump's administration on
international cooperation were "worrisome." Some of Mr. Trump's
complaints about international trade and multilateral institutions
reflected "simplistic narratives," he said, though he added that
economic imbalances between countries and regions are real
enough.
For now, European policy makers are in wait-and-see mode.
"We still have to see how this new administration is going to
behave, or act," he said.
Mr. Weidmann said the advantages of globalization are "drifting
ever further out of focus," saying this could be true because they
aren't felt so immediately and are harder to grasp than the
disadvantages.
"This debate fails to fully consider, however, is that it is
international trade and interaction that underpins our prosperity,"
he said. "Trade promotes the spread of fresh, productive ideas and
new, improved products. It is therefore trade which stimulates
productivity, which in turn is what drives wages higher."
Among the eurozone's members, Ireland has the closest economic
links to the U.S., having pursued a multidecade strategy based on
persuading U.S. firms to use the country as their European
base.
In a speech to business people in Cork, Central Bank of Ireland
Governor Philip Lane said the external threats to Irish economic
growth include tax changes that are under consideration following
Mr. Trump's election, as well as protectionism.
"Looking at the wider international picture, given the strong
presence of multinationals in the economy, there are...risks
related to the potential for changes to broader international
taxation and trade arrangements." said Mr. Lane, who also sits on
the European Central Bank's governing council.
Write to Todd Buell at todd.buell@wsj.com and Jason Douglas at
jason.douglas@wsj.com
(END) Dow Jones Newswires
February 23, 2017 08:26 ET (13:26 GMT)
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