Markets Chief: No Escape For Australia

4 Mar

From the Sydney Morning Herald:

Australia is unlikely to avoid an imminent economic downturn caused by excessive government debt, a top European markets regulator says.

”Prepare for a very difficult economic time, which you will not be able to escape,” Netherlands Authority for Financial Markets chairman Hans Hoogervorsttold the Australian Securities and Investment Commission summer school yesterday.

The debt taken on by governments around the world to bail out banks and stimulate domestic economies would take ”a tremendous toll on the world economy for a long time to come”, he said.

”The problem is that there is now too much on the shoulders of government. They have basically taken on all the problems caused by the financial crisis, with the effect that most of them are in really, truly horrible budgetary shape.”

He said the only way out was for the public and private sectors to tighten spending and repay the debt.

”The problems are so serious there are no easy ways out any more,” he said. ”It is simply inevitable that economic growth for a long period will be very meagre.” And Australia’s economic luck during the financial crisis would run out, he said, because the stimulus programs running in Asian countries, which had fuelled demand for Australian resources, could not last forever.

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