The European Union summit kicks off Thursday with the aim of finding a way out of the persistent turbulence caused by the US sub-prime mortgage market crisis. It is now a major downside risk to the economy in the 27-nation bloc.
It has become tradition for the EU spring summit to focus on the economic dimension of the 27-nation bloc. With financial stability, economic reforms and climate change high on the agenda, this year the summit opens at a time when difficulties in the international financial sector are still working their way through the system.
Since last summer when the US sub-prime mortgage crisis broke out, European financial markets have come under tremendous pressure in the credit squeeze, with financial institutions reluctant to lend for fear of being sucked into the turmoil.
Nobody knows how big the losses will be. The continuous uncertainty has undermined trust and confidence among investors and consumers, clouding the economic outlook of the EU.
In a bid to restore financial stability, EU leaders were expected to endorse a series of measures in the financial sector, such as encouraging prompt and full disclosure of losses by financial institutions and enhancing their transparency. The leaders are also likely to back measures to improve information provided by credit ratings agencies and early warning systems on financial stability, and step up cooperation between regulatory authorities in the EU and globally.
EU leaders were also scheduled to adopt the next three-year cycle of the Lisbon strategy, a flagship reform project within the 27-nation bloc aimed at promoting economic growth and jobs when it was relaunched in 2005.
