MercoPress. South Atlantic News Agency

EU in recession: 0.1% growth in 09 and 0.9% in 2010

European Union finance ministers on Monday opened in Brussels two days of talks aimed at coordinating proposals for a new global financial order while prospects for the EU real economy continued to deteriorate.

The latest EC statistics show that the economy of the 15 Euro zone countries was probably already in recession and would expand by just 0.1% in 2009. Germany, France and Italy are forecasted to come to a standstill or shrink straining government finances and household spending. EC forecasts EU GDP to fall back 0.1% in the third quarter and another 0.1% in the fourth quarter of this year which means the region is in recession for the first time since the creation of the Euro zone in 1999. Overall growth in 2008 should be 1.2%, below the latest estimate of 1.3%., while in 2009 expansion is almost flat, 0.1% and 0.9% in 2010. The EC anticipates unemployment in the Euro zone to increase one percentage point in the coming two years, from 7.6% in 2008 to 8.7% in 2010. EU officials said European governments were beginning to rally around a consensus to boost the role and powers of the International Monetary Fund to support faltering economies â€" an issue that will top the agenda of a Nov. 15-16 summit in Washington of G-20 countries, which includes the G-7 industrialized democracies as well as developing powers such as Brazil, India, Russia and China. IMF has already dipped into its 250 billion USD reserves to provide emergency loans to Iceland, Hungary and Ukraine totalling 30 billion. Pakistan has said it may call on the international body for another 5 billion. British Prime Minister Gordon Brown was in the Middle East on the weekend to push Arab nations into providing hundreds of billions of extra dollars to the IMF, saying the current fund was not enough. Dutch Finance Minister Wouter Bos said Monday that bankers had to change risk and reward systems, or governments would force them to. In an editorial in Monday's Financial Times Deutschland, he said a risk manager could be made a member of a company's board with veto power, and that salary structures could be placed under regulatory supervision. The finance ministers will debate ways to make global financial markets more transparent and accountable ahead of a meeting of the 27 EU leaders on Friday. The G-20 Washington summit will debate an update of financial rules created in 1944 at Bretton Woods, New Hampshire that helped nations cope with economic problems following World War II. That conference led to the creation of the IMF and World Bank. France is pushing for the Washington summit to make concrete reforms, saying they could agree to coordinate regulation for multinational finance groups, to supervise credit rating agencies more closely and tackle risk-taking in the financial sector. German Finance Minister Peer Steinbrueck said he broadly agreed with the French suggestions. But Britain is cooler, saying it thinks it is too soon to sign up to specific rules when global talks are just beginning. The financial crisis and the economic downturn that has followed it have led governments to inject huge sums of money to prop up faltering financial institutions.