European leaders: Let's get world economy moving

November 7, 2012: 8:55 AM ET
france, germany, flags
European leaders congratulated President Obama and urged close cooperation to fix the world economy
LONDON (CNNMoney)

European leaders were quick to congratulate President Obama on winning a second term -- and underscored the need to work with him to get the world economy moving again.

"Creation of growth and jobs remains a priority for both the U.S. and the EU, and we will continue to work with President Obama to unlock the unparalleled potential of the trans-Atlantic market," European Commission President Jose Barroso said in a statement Wednesday.

Chancellor Angela Merkel praised Obama for working closely with Germany in his first term.

"I look forward to being able to pursue this further, so that together our countries can continue to master the most important foreign policy and economic challenges we face as friends and allies," she said in a statement.

Europe barely figured in the U.S. presidential campaign, even though much of the eurozone remains stuck in recession as governments and consumers cut spending to reduce their debt.

Related: Europe's debt crisis

Ireland, Greece, Portugal and Spain are relying on rescue funding of one form or another from their international partners, and even core economies such as Germany and France are likely to experience a further slowdown in activity next year.

The Center for Economics and Business Research said Monday it expects the eurozone to remain in recession throughout 2013 -- shrinking by 0.4 percentage point -- and return to only marginal growth the following year.

"The economic situation in some parts of Europe is moving from bad to catastrophic," said Cebr chief executive Douglas McWilliams.

Britain, which is also pursuing an aggressive program of austerity, emerged from recession in the third quarter. But recent data suggest a darker short-term outlook for the economy, in part due to the weak performance of its European trading partners.

Speaking during a tour of the Middle East, Prime Minister David Cameron congratulated President Obama and said he looked forward to working with him again.

"There are so many things that we need to do: we need to kick start the world economy and I want to see an EU-U.S. trade deal," Cameron told the BBC.

World reacts to Obama's re-election

European policymakers are under pressure to strike a better balance between reducing government borrowing and encouraging growth. The International Monetary Fund has begun to worry publicly that spending cuts might be becoming self-defeating.

The United States, which has allowed its borrowing to rise, has seen growth pick up pace this year, although its exports have also felt the impact of a slowdown in China and Europe's crisis.

But political gridlock in Washington has left the world's biggest economy staring over a so-called fiscal cliff, a raft of tax increases and spending cuts worth $ 600 billion due to come into effect on Jan. 1. If enacted, they could push the United States back into recession.

HSBC chief economist Stephen King summed up the scale of the challenges facing President Obama with a tweet: "Four more years: fiscal cliff, debt ceiling, debt mountain...the fiscal challenges are big."

Fitch ratings agency said President Obama would have to move quickly to secure agreement on avoiding the fiscal cliff, raising the debt ceiling and agreeing to a deficit reduction plan for the medium term, or risk the U.S. losing its AAA rating next year.

Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.25%4.27%
15 yr fixed3.23%3.21%
5/1 ARM3.37%3.37%
30 yr refi4.19%4.36%
15 yr refi3.18%3.17%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Search for Jobs