MercoPress. South Atlantic News Agency

Enough stimulus packages, there’s a limit to debt, warns Trichet

Many uncertainties still ahead according to the European Central Bank

Europe's central bank chief on Sunday cautioned against any new government stimulus plans and predicted the global economy will pick up in 2010. But he also warned it would be a mistake to believe that recovery is a foregone conclusion.

“We are seeing at this moment a slowdown in the drop in activity,” Jean-Claude Trichet said on France's Europe-1 radio.

Global economic activity should come “close to stability” later this year, and “we should register the recovery of growth during the next year,” he said. He also welcomed signs of stabilization and renewed confidence in inter-bank lending.

Trichet said any new stimulus packages would only drive governments deeper into debt that would saddle future generations. Stimulus packages already in place “are completely extraordinary. In our analysis, this is sufficient,” he said.

“There is a moment where you cannot spend more and accumulate more debts. We are at that moment,” he said.

That reflects the position held by many European governments even as the US and UK governments have pumped money into projects aimed at pulling the economy out of recession.

Trichet said governments and companies should apply stimulus money and measures recommended by international financial institutions.

He also cautioned against too much faith in forecasts of an economic recovery next year. 'We should see a return to positive growth during next year; this is what I have been telling everyone”.

But he added that “it would be a mistake to believe that this is a foregone conclusion: There are uncertainties, risks”. Mr Trichet added that much depended on consumer and investor confidence.

Many European countries have indicated that they will not be offering further economic stimulus