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3/2/09

FT.com - ECB calls for crackdown on wages and public spending - by Ralph Atkins. Peggy Hollinger and Chris Bryant

For the complete report from the FT.com click on this link

ECB calls for crackdown on wages and public spending - by Ralph Atkins. Peggy Hollinger and Chris Bryan

The European Central Bank yesterday urged governments to impose strict controls on public spending and wages as fresh data showed the region's recession deepening and unemployment rising at a faster pace. Jean-Claude Trichet, ECB president, said pay restraint would help prevent unemployment scarring "a large proportion of the people of working age". Governments "should pursue courageous policies of spending restraint especially in the case of public wages". His comments provided support for the Irish government, which has had to adopt unpopular austerity measures after one of the most dramatic turnrounds in economic performance by any eurozone country. Irish trade unions have launched large-scale public protests over proposals to impose, in effect, pay cuts on state employees. Mr Trichet's hardline remarks also highlighted ECB concern fiscal stimulus spending will backfire by undermining confidence in public finances.

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