Kudlow Tells EU to ‘Help Themselves’ and Not Rely on U.S. Growth
U.S. President’s top economic adviser has sharply criticised the European Central Bank’s stimulus measures to spur the economy.
(Bloomberg) -- U.S. President Donald Trump’s top economic adviser offered sharp criticism of the European Central Bank’s revival of stimulus measures to spur the economy.
National Economic Council Director Larry Kudlow said Friday during a Bloomberg Television interview that a ECB decision Thursday to extend a new round of cheap loans to the banking system wouldn’t be enough to fix the continent’s underlying problems.
ECB President Mario Draghi “is a very smart man. I’m not here to take his inventory,” Kudlow said.
"I’m just saying, another round of that version of QE -- concessionary cheap loans to banks -- that’s not the answer," he said. “The answer is they’ve got to make labor and fiscal reforms throughout Europe, and most of those countries haven’t really done it, so their growth rates are uncomfortably close to zero."
Kudlow’s criticisms were prompted by a question about whether the U.S. economy could withstand a global slowdown. He said he was confident it could, and claimed that American strength was the only thing keeping Europe afloat at the moment.
Recent data have painted a gloomy picture of the euro area’s state of economic affairs, raising concern that the 19-nation bloc would be flirting with recession before long. The ECB responded to sharp downward revisions to its 2019 projections for growth and inflation by announcing a fresh series of long-term bank funding and promising to keep interest at their current rock-bottom levels for longer.
The Trump administration is forecasting U.S. economic growth of about 3 percent this year, which Kudlow said is being delivered through tax cuts, de-regulation and new trade deals.
“If it weren’t for the U.S. -- our consumers are buying their goods, our businesses are buying their capital goods, right, industrial goods. We’re the only demand they have,” Kudlow said. “We are trying to help them. But at some point they’ve got to take measures -- you know, help comes to those who help themselves.”
On efforts by the U.S. and EU to negotiate a trade deal, Kudlow said the talks have been constructive and that the two sides are moving toward an “early harvest” agreement on LNG, soybeans and standards on pharmaceuticals, among other things.
“We’re moving in the right direction to show that the United States and the EU can in fact have a much better trade relationship,” he said.
Transatlantic trade talks have not officially started and no launch date has been set yet, EU Trade Commissioner Cecilia Malmstrom told Bloomberg on Thursday. The EU, which still needs a negotiating mandate, wants to narrow the scope of the talks to lowering tariffs on industrial goods and autos before opening it up to thornier issues, according to Malmstrom.
U.S. Trade Representative Robert Lighthizer has told Congress that he wouldn’t conclude an agreement without including agriculture, while the EU wants the politically sensitive issue kept out of talks.
--With assistance from Jonathan Ferro and Jenny Leonard.
To contact the reporter on this story: Matthew Boesler in New York at mboesler1@bloomberg.net
To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Sarah McGregor, Tony Czuczka
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