They are seeing jobs disappear, bonuses capped and salaries cut, their profit opportunities dwindle and their most important corporate customers are deserting them in droves. At the same time, the regulations under which they operate are getting tougher, more complex and more confused. Regulators in different countries are imposing different rules and dreaming up new ones every few months.

In 2007, the average return on earnings of the 40 largest European banks was 16 percent; today it is around 1 percent. This strong loss of profitability comes in part from a sharp increase of credit risk. Non-performing loans have tripled to almost 7 percent of the loan book. Gross profit margins have been cut by one-third to a bare 2 percent and the extra regulations are increasing costs.

With a reduced demand for the euros they collect in deposits, they are having to pay more for the dollars they need to compete in financing trade and are thus being driven out of overseas markets. European banks have slashed cross-border lending $3.7 trillion since 2008 and the International Monetary Fund's latest report says it expects Europe's banks to cut their assets a further $2.8 trillion.

Europe's banks are also having to cope with the euro crisis, which wasn't entirely of their making, and with the spasmodic, chaotic policy responses by Europe's dysfunctional political system. Above all, they are living in a new world of central bank authority, in which the world's central banks have changed the terms of finance by issuing some $7 trillion in quantitative easing.

Even without going into the almost theological arguments whether this massive pumping of liquidity into the system represents the printing of money or not, we all know the result. Interest rates are at rock-bottom lows, but with Europe's economy stuck in zero or negative growth, there is limited demand from business to borrow the money.

Above all, Europe's big corporations are less and less inclined to raise money from banks, as they have traditionally done. Europe's banks used to finance 80 percent of corporate loans. But now that big businesses have learned from their U.S. competitors how to tap the financial markets on their own by issuing corporate bonds, Europe's banks are financing about half of corporate debt, according to a study by France's Societe Generale.

And now European companies are also learning from the Americans how to tap the big insurers for finance. In the United States around 80 percent of corporate financing comes from non-bank sources, including insurance. Private corporate bonds are 30 percent of U.S. assets under management, compared to less than 8 percent in Europe.

Having learned in the happy years of the global boom how to exploit and enjoy the fruits of globalization, Europeans are now seeing globalization go into reverse. Cross-border capital flows have fallen from $11.8 trillion in 2007 to $4.6 trillion in 2012. Even if European banks were able to retain their former market share, which they are failing to do, the cake is still getting much smaller.

It may get smaller yet. Despite lobbying by the Americans, Japanese and Europeans, the new head of the World Trade Organization, the body whose mission is to defend and increase the freedom to trade, is Brazil's Roberto Azevedo. He is not much of a free trader. For the last 15 years as Brazil's voice on the WTO, he has helped block the Doha Round and supported Brazil's own efforts to restrain free movement of capital by blaming the West for so-called "currency wars."

Azevedo owes his new job to the strong support of China, India and other developing countries, who see world trade as a zero-sum game in which they prosper by making the West pay. He defeated the Mexican candidate, Herminio Blanco, a real free trader who negotiated the North American Free Trade Agreement, which has seen Mexico prosper in partnership with the United States and Canada while Brazil's more protected economy is faltering.

Combine all this with the effects of new banking regulations like Basel III, which hits banks by forcing them to hold more of their capital as reserves, and the planned "ring-fencing" of their retail from their trading and investment operations, plus the inability of Europe's politicians to agree what they mean by the proposed new European banking union, and the environment for bankers is tough.

No wonder bankers complain that if the last crisis came from too little regulation, the next one may be triggered by too much of it. Of course, bankers brought much of this on themselves by reckless, selfish and even fraudulent behavior.

But as the banks' critics continue to stress the dangers of banks being "too big to fail," it becomes ominously more likely that the result will be a banking system too fragmented and shackled to do its necessary work of turning depositors' savings into profitable investments that drive growth.

]]> Thu, 23 MAY 2013 23:06:01 AEST Beijing (AFP) May 17, 2013 - China's private sector wages in urban areas grew 17.1 percent in 2012, official figures showed Friday, even as the country's economy expanded at its slowest pace in 13 years.

Average urban pay in private companies increased to 28,752 yuan ($4,681) last year, the National Bureau of Statistics (NBS) said on its website.

But the rise was slower than the 18.3 percent of the previous year, NBS data showed. Adjusted for inflation, the increase was 14.0 percent.

Chinese private sector average urban wage growth has been rising steadily in line with the country's expanding gross domestic product (GDP), with the pace of wage increases more than doubling from 2009-2010.

Beijing has repeatedly stated its intent to rebalance the economy more towards consumer demand, rather than investment and exports, but foreign businesses in China have expressed concern about rising wages.

Last year in a survey of European companies operating in China one in five said they may shift investment to other countries due to rising wages and cumbersome regulations.

China's economy last year grew at its slowest pace since 1999, with GDP expanding 7.8 percent in the face of weakness both domestically and overseas. Foreign direct investment into China also declined for the first time in three years.

According to a separate commentary on the NBS website, public sector urban wages increased 9.0 percent, adjusted for inflation, to 46,769 yuan in 2012 from the year before.

The commentary attributed China's slowing wage growth to the deceleration in economic growth last year.

]]> Thu, 23 MAY 2013 23:06:01 AEST College Park, Md. (UPI) May 17, 2013 - On May 6, I wrote Europe was in danger of falling into a permanent recession -- a depression.

Now, the European statistical agencies report France joined Italy and Spain's recessions during the first quarter and economic activity across the entire eurozone continued to contract.

The straightjacket imposed by euro-think -- allegiance to a failed experiment in a common currency, ill-conceived and overzealous austerity measures and halting and inadequate labor market reforms -- caused continued economic contraction across the entire eurozone.

Europe's gross domestic product fell 0.2 percent in the first quarter, after dropping 0.6 percent in the fourth quarter, and has been falling for six quarters.

Germany is barely growing -- GDP was up a scant 0.1 percent after falling 0.7 percent in the fourth quarter. Europe's situation would be akin to California being in neutral, while the rest of the United States went backward -- profoundly!

In France, investment is sinking like a stone. New spending by non-financial businesses was down 0.8 percent after falling 0.7 percent in the fourth quarter. Inadequate labor market reforms, France's virulent protectionist instincts and a rudderless socialist government, coupled with a euro that is overvalued for much of the French economy, are driving businesses away.

Even though consumer spending was nearly flat, austerity measures and weak investment spending pushed down GDP 0.2 percent in the first quarter, after a similar loss in the fourth quarter.

Italy's data told a similar sad tale. GDP fell 0.5 percent after falling 0.9 percent in the fourth quarter.

Elsewhere, unemployment in Spain and Greece remain at alarmingly high levels.

Outside the eurozone, the United Kingdom narrowly escaped a recession. First quarter GDP was up a slim 0.3 percent, after falling a similar amount the previous quarter.

For the eurozone, the positive notes are that the first quarter contraction wasn't as severe as in the fourth quarter and recent snippets of data for spring economic activity have been a bit less discouraging in the north, indicating the U.S. spring swoon may be mirrored by some moderation in the European malaise.

Germany and the other northern countries are quite dependent on the south to export their industrial products and are much advantaged by the euro, which tends to be undervalued for their economies at current prices while overvalued for the southern region.

Essentially, the euro imposes a misalignment in prices for industrial products and tradable services, making the north appear more competitive than its fundamentals would otherwise support and the south perform poorly. Along with austerity, clinging to the euro makes unlikely a sustained recovery in Greece, Spain, Portugal and regions within Italy and France aligned with the south.

In the south, labor market reforms and falling wages cannot proceed rapidly enough to attract new investment as long as the common currency is in place, putting the region in a permanent recession.

That is a recipe for a permanent recession throughout Europe or at least prolonged stagnation similar to the fate of Japan over the last several decades.

Long periods of weak or declining capital spending will leave European industry permanently out of date and terminally uncompetitive. Though pockets within the core of Europe's industrial north will thrive -- much like Fiat and similar firms in Italy's Northern League -- overall Europe will decline.

Eventually, incomes and living standards in more robust Asian economies -- South Korea and urbanized China -- will overtake those in important segments of Europe.

(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. Follow him on Twitter: @pmorici1)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

]]> Thu, 23 MAY 2013 23:06:01 AEST Beijing (AFP) May 15, 2013 - China's central bank, which manages the world's largest foreign exchange reserves, is looking into a growing scandal over the access journalists at Bloomberg News had to potentially sensitive data, reports said Wednesday.

The People's Bank of China (PBoC) is the latest major financial organisation to examine the controversy involving the financial news wire, whose terminals are used by officials at many of the world's most important financial institutions and banks.

Bloomberg announced Friday it was curbing reporter access to certain data on its financial terminals and apologised after reports said its journalists used the devices to access private data of Wall Street banks.

The PBoC "is aware of the situation and is looking into the matter", Dow Jones Newswires cited an unnamed source with knowledge of the bank as saying.

China's central bank oversees the management of the country's $3.4 trillion foreign exchange stockpile and is concerned any leak of its trading activities could shift the market while hurting the bank.

A PBoC spokesman declined to comment to AFP.

The US Federal Reserve said Monday it had asked Bloomberg News for information on whether its journalists were inappropriately allowed to see client data.

One report said the system allowed access to the accounts of Fed chairman Ben Bernanke and former Treasury Secretary Timothy Geithner.

The US Treasury Department was "looking into the matter", a source familiar with the matter told AFP in the US.

Institutions in other countries and jurisdictions are also becoming involved.

A spokesman for the South Korea's central bank told AFP its staff used around 40 Bloomberg terminals and it was "closely monitoring" the US Fed investigation.

"We made an inquiry to Bloomberg's Seoul office and were given an explanation that was little more than the public apology put out by the Bloomberg headquarters earlier," the spokesman added.

A spokesman for the Hong Kong Monetary Authority told AFP: "We are aware of the reported incident and we are looking into the matter."

Japan's central bank also said this week that it had contacted the company "to determine the facts".

A rival of Thomson Reuters, Bloomberg was founded by New York Mayor Michael Bloomberg, who is not involved in management due to his political activities.

Bloomberg's website is blocked in China after it reported last year that the family of Xi Jinping, the country's new president, had assets worth hundreds of millions of dollars.

]]> Thu, 23 MAY 2013 23:06:01 AEST London (AFP) May 15, 2013 - Asia-focused bank HSBC announced Wednesday that it will make another $2-3 billion (1.5-2.3 billion euros) of new cost savings, as the group seeks to boost profitability.

The lender said in a statement that it will seek the additional sustainable savings between 2014 and 2016.

Questioned about the impact on jobs, chief executive Stuart Gulliver told journalists that the bank would employ between 240,000 and 250,000 staff worldwide by 2016. That compares with the current level of 254,000.

HSBC had already revealed last week that it had slashed $4.0 billion from its annual costs, axing about 46,000 jobs since 2011 under its previous three-year restructuring plan.

"We have transformed HSBC in the first phase of the execution of our strategy," Gulliver in Wednesday's statement.

"We have announced the closure or disposal of 52 non-strategic or underperforming businesses, achieved $4.0 billion of annualised sustainable cost savings and generated double-digit loan growth in 15 priority markets.

"HSBC is now simpler, easier to manage and ready to take advantage of growth opportunities."

HSBC had announced last week that first-quarter net profits more than doubled to $6.35 billion, aided by sliding bad debts, deep cost cutting and a solid performance in Britain and Hong Kong.

Last year, however, HSBC had posted a 16.5-percent slump in net profits as it was hit by US money-laundering fines, mis-selling scandals, rising taxation and a vast accounting charge.

]]> Thu, 23 MAY 2013 23:06:01 AEST College Park, Md. (UPI) May 14, 2013 - College is too expensive, graduates can't find decent jobs and pay off loans and students, parents and educators all share in the blame.

Now, U.S. President Barack Obama proposes to forgive more student debt and that will make a bad situation worse.

More than half of recent graduates are working as waiters, taxi drivers or some other occupation that doesn't require a college education. The number in minimum-wage jobs has doubled since 2007.

Slow growth and a tough jobs market is one reason but as importantly, too few college students choose tough majors like nursing, engineering and accounting that enjoy a robust demand for graduates. Too many select easier subjects like politics, history and other liberal arts and emerge with few practical skills.

Good jobs abound for technicians in healthcare, computers and other fields -- often educated at community colleges -- and the U.S. Labor Department finds most rapidly growing occupations don't require a bachelor's degree. However, parents fear their children, without a four-year diploma, will lack the flexibility to navigate a lifetime of changing conditions.

If students are lazy and parents risk adverse, university professors and presidents are worse.

Professors simply teach less and engage in more research of questionable value than in the past. In the 1950s and 1960s, a significant track record of publications wasn't required for tenure for most undergraduate faculty -- advancing the frontiers of science and the arts was mostly the work of professors engaged in post-graduate education.

Nowadays, professors at all levels must publish to win tenure but much of what they do adds little value to either the practical world or the advancement of knowledge in a purer sense -- but requires lighter teaching loads to enable.

Once tenured, many don't publish much but still keep their light teaching schedules.

University bureaucracies are even worse -- presidents and deans often have staffs bigger than chief executive officer and managers running much larger businesses. And faculties, which make virtually all decisions by consensus, spend endless hours in committees advising presidents and deans and are supported by mind-numbing bureaucracies, too.

University presidents are politicians, not business managers. They understand who makes the choices -- students, who pay the bills -- parents, and who they must please in the Alice-in-Wonderland world of university governance -- faculty.

Rational they are -- instead of encouraging students to study useful subjects and containing sky-rocketing costs, they focus on fund raising and lobbying government officials to facilitate more student loans.

Tuition jets into the stratosphere, students amass huge debt and universities produce a lot of high quality unemployment.

Obama is rational too -- parents, students and former students all vote.

Instead of radically refocusing national policy on skills acquisition through a dramatic expansion of vocational education in high schools and community colleges, he promises to increase the percentage of Americans with four-year diplomas.

Now he proposes forgiving billions in student debt with federal dollars. Borrowers in the program would make payments equal to 10 percent of their monthly income, after rent and basic living expenses, and after 20-years of on-time payments be forgiven of all debt -- regardless of how much they had borrowed.

Debt forgiveness simply encourages young people and parents to continue poor choices and borrow too much and colleges to push up tuition -- things the nation can't afford. It certainly won't help graduates find jobs.

To compete in the global economy and create good jobs at home, the United States needs workers with the right skills. That means limiting access to college to those who can genuinely profit from a university education, requiring professors to teach more and teach more that is useful, and redirecting more of what the nation spends on education into other channels of vocational training.

(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. Follow him on Twitter: @pmorici1)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

]]> Thu, 23 MAY 2013 23:06:01 AEST Beijing (AFP) May 13, 2013 - China's shadow banking activities have risen nearly 70 percent over the past two years and now total more than half the size of the world's second-largest economy, ratings agency Moody's said Monday.

Shadow banking includes private lending, off-balance-sheet vehicles and trusts, and allows borrowers to circumvent banks' formal underwriting standards, as well as official regulation.

Such lending has surged 67 percent since the end of 2010, Moody's said in a report, reaching an estimated total of 29 trillion yuan ($4.7 trillion) at the end of last year, or 55 percent of China's GDP.

The rapid growth was partly due to some borrowers having difficulties obtaining regular bank loans, according to the report, and threatened the health of the banking system and the overall economy.

"Shadow banking may encourage excessive financial leverage in the broad economy and add to credit bubble concerns," Moody's said.

"Given the substantial scale and growth of shadow banking activities in China, we are doubtful of the banks' ability to isolate themselves from a significant increase in defaults in the shadow banking domain."

China's banking regulator has sought to rein in non-transparent lending activities and in March ordered banks to step up checks on wealth management products as part of a bid to boost risk control and openness.

But Moody's said: "The impact from shadow banking on banks will depend on the amount and timing of losses and how they are allocated, variables that are difficult to assess at this point, given the lack of transparency and fast-evolving nature of shadow banking in China."

]]> Thu, 23 MAY 2013 23:06:01 AEST Beijing (AFP) May 13, 2013 - Industrial output in China rose 9.3 percent in April, the National Bureau of Statistics (NBS) said Monday, accelerating from March but below market expectations, underscoring sluggish growth momentum.

The April figure was an improvement on an increase of 8.9 percent in March but was still slower than a median forecast of 9.5 percent growth in a poll of nine economists by Dow Jones Newswires.

Fixed-asset investment -- a key measure of government spending -- rose 20.6 percent in the first four months of the year, the NBS said, slightly down from 20.9 percent in the first quarter.

Retail sales were up 12.8 percent year-on-year in April, picking up marginally from 12.6 percent in March, it said in a statement.

The figures are a sign that recovery is still uncertain in the world's second-largest economy, analysts said.

"This is not the start of a rally, it is a sputtering whimper as momentum continues to fade," said Ren Xianfang and Alistair Thornton, economists with research firm IHS Global Insight, in a report.

Slowing investment suggested weakness in manufacturing and infrastructure construction, they said, adding it could decelerate further as tightening measures on the housing market start to bite.

Chinese authorities have sought for the past three years to control property price rises with purchasing restrictions, higher minimum downpayments and taxes in some cities on multiple and non-locally-owned homes.

In March, they issued new rules including a capital gains tax of 20 percent on profits from residential property sales.

Homeowners were previously taxed just one or two percent of the sale price.

With a series of economic indicators released recently, Bank of America Merrill Lynch analysts said they saw "more downside risk" to their forecast of 8.1 percent growth in the Chinese economy.

China grew at its slowest pace in 13 years in 2012, with gross domestic product expanding 7.8 percent in the face of weakness at home and in key overseas markets.

Economic growth rebounded to 7.9 percent in the final quarter of 2012, raising hopes for a recovery, but in the first three months of this year growth slowed to 7.7 percent.

The official purchasing managers' index (PMI), a widely watched indicator of the health of the Chinese economy, slowed to 50.6 in April from 50.9 in March.

The consumer price index -- a main gauge of inflation -- increased by 2.4 percent last month, lower than the official target of 3.5 percent for 2013 and reflecting subdued domestic demand.

Chinese leaders have said expansion will slow in the next stage of the nation's development from the near-double-digit yearly rises of recent decades, as they try to retool the economy to emphasise consumer demand as the key growth driver, rather than investment and exports.

Analysts called on Beijing to speed up structural reforms, warning that credit stimulus alone could not change economic fundamentals and risked worsening the country's overcapacity problems.

"The China story remains an unsustainable credit story, and we have seen little to suggest that the fundamentals are improving," said Ren and Thornton.

"For this to happen, we are looking for reform, not stimulus or monetary policy tweaks. And we would suggest that so far, the new administration has been long on reform rhetoric, short on reform action."

]]> Thu, 23 MAY 2013 23:06:01 AEST Berlin (UPI) May 13, 2013 - Like the skies clearing after a storm, some small but hopeful patches of blue and even the occasional ray of sunshine are breaking through the prolonged gloom over Europe's economic prospects.

The question is whether these hopeful signs last until Germany's election in September.

The Bank of England is expected this week to revise upward its forecasts for economic growth this year and a revision of last year's national economic statistics suggests that Britain didn't, in fact, suffer the supposed double-dip recession.

Advance bookings for tourists to Greece this summer have topped 17 million, the highest figure since the financial crisis began in 2007, which should -- at least temporarily -- start to reduce the country's dismaying 27 percent unemployment rate.

The coalition government of Antonis Samaras seems to have stabilized the country's volatile politics and risen in the opinion polls. The opposition has split, with the leftist AKEL party wanting to leave the euro, while the Syriza Party of the young firebrand Alexis Tsipras wants to remain within the eurozone, albeit on new terms.

In Portugal, the prospects look good for a return to the bond markets, after successfully rising $3.9 billion with a 10-year term, the first such loan since 2011, when the country sought the protection of a European bailout. It now looks as though Portugal should successfully from that $103 billion bailout program on schedule next year.

In response to the growing clamor against their austerity programs, European leaders have loosened the fiscal belts a notch or two, giving countries like France two more years to reach the target of a maximum budget deficit of 3 percent of gross domestic product. This has proved controversial. Jens Weidemann, head of the Bundesbank, Germany's central bank, warned that Europe was destroying its own credibility by chopping and changing its rules.

"To win back trust, we cannot just establish rules and then promise to fulfill them at some point in the future," he said. "Rules must have force or they are lifeless."

Still, the new focus on Japan's daring new financial strategy and the record-breaking performance of stock markets is taking some of the focus and much of the worry away from Europe. Even the prospect of a new banking problem in Slovenia has caused no flurries in the markets.

The view is taking hold that Europe could have a calm summer ahead of the German elections in September, the big event of Europe's political year.

Not only is Germany the richest and most populous country in Europe but incumbent Chancellor Angela Merkel is the veteran heavyweight of the political scene. She has been chancellor since 2005 and has worked with three French presidents (Jacques Chirac, Nicolas Sarkozy and Francois Holland), three British prime ministers (Tony Blair, Gordon Brown and David Cameron) and two U.S. presidents. Only Russia's Vladimir Putin has been at the world's top table for longer than Merkel.

If the European economic scene remains calm, Merkel's prospects of re-election will probably be stronger.

But nothing is certain, because the key question of German politics isn't in her control. Under the German political system, it is almost impossible for either Merkel's center-right Christian democrats, or the opposition SPD socialist party, to rule on their own. Each would need a coalition partner.

Merkel's current and preferred partner is the small Free Democrat Party, which favors free market economics and tax cuts. But the opinion polls suggest that the FDP will have difficulty in reaching the threshold of 5 percent of the vote, required to qualify for any seats in the Bundestag, Germany's Parliament.

If they have no seats to guarantee her a parliamentary majority, they are useless to Merkel. She would need another coalition partner, either the Greens or the SPD once again in a grand coalition of national unity.

But her own share of the vote could be eroded by the emergence of a new party on the right, the AfD (Alternative for Germany) Party, which wants to leave the euro and embraces catchy, populist slogans about no more money from hard-working Germans going to lazy, improvident Greeks and Spaniards. Even if the AfD fails to reach the threshold of 5 percent of the vote, by taking votes from Merkel they could change the outcome of the election.

Bond markets and foreign investors will soon start watching Merkel's election prospects with care. If she were to be defeated, and replaced by a Red-Green coalition of socialists and environmentalists, market confidence in the euro and the European economy could take a big hit. Europe will need a lot more blue sky, sunshine and signs of recovery over the next three months to fend off what would be a dramatic political upset if Merkel were to fail.

]]> Thu, 23 MAY 2013 23:06:01 AEST Aylesbury, England (UPI) May 10, 2013 - EU senior ministers attending a G7 summit northwest of London are having to wriggle back into a pro-growth posture after months spent on fractious -- and expensive -- campaign for cutbacks, economic retrenchment and overall austerity.

Months after French President Francois Mitterrand broke ranks from Berlin's pro-austerity mantra, the European Union is having to listen to its own rebels as well critics elsewhere -- including the United States -- who want more European stimulus-driven policies and less tightening of belts.

EU economies that slashed away at Berlin's bidding now face deep recessionary trends and are under pressure from furious electorates as the numbers of the jobless multiply.

The meeting began Friday and will continue over the weekend. The Group of Seven includes Britain, Canada, France, Germany, Italy, Japan and the United States.

Leaders of the seven plus Russia will meet in a wider meeting June 17-18 June at Lough Erne Golf Resort, Enniskillen, Northern Ireland.

Friday's talks were to focus mostly on European Union's woes but a row was brewing as ministers took issue with Japan's stimulus measures, seen as a backdoor strategy to drive down the yen's value and promote Japanese exports.

Analysts said Japan was under pressure to avoid measures that could trigger a currency war. EU ministers are particularly sensitive, as their countries want to boost exports, too.

Cash-strapped Europe is also pushing for closer collaboration on tax collection, and new data collated with help from intelligence agencies suggests the continent's rich and famous are in for a few shocks.

Hundreds of Europe's rich were named in lists alleging elaborate tax evasion schemes involving EU accountants and lawyers and the EU states' own overseas tax havens. Britain, president of the Group of Eight this year, is top of the list with overseas territories named as tax havens.

The tax recovery proceeds are seen by governments as timely cash boost in lean times.

British Chancellor of the Exchequer George Osborne said the European Union faced the challenge of embracing urgent measures to nurture recovery.

"Our challenge is not to falter in the difficult steps we need to take to make that recovery sustainable and lasting," Osborne said.

"Markets have calmed, and there are signs that this is feeding through into greater confidence. But we cannot take the global recovery for granted," he added.

Analysts said European Union's toughest challenge was how to row back on months of policymaking and pronouncements that advocated the opposite of what the union is having to accept. Severe budget cuts are now seen to be a discredited option, but EU leaders are loath to admit their failed attempts at reform.

U.S. Treasury Secretary Jacob Lew called for "the right balance between austerity and growth."

Recent economic data from Germany and the United States are helping ministers argue for more stimulus measures.

]]> Thu, 23 MAY 2013 23:06:01 AEST Subscribe to our daily selection of space, military, environment and energy newsletters responseText http://visitor.constantcontact.com/manage/optin/ea?v=0016gbbKsaiGSpQFojVO8ZoHw%3D%3D