Menu
World news
House prices post strongest annual growth in nearly three years
Osborne warns over 'badly-timed' Tobin tax
Bank of England says no to more QE
ECB holds interest rates on hopes of recovery
Brussels dismisses 'plainly wrong' IMF criticism over Greece
China-EU trade war a risk for UK growth
Hard-line ECB washes hands of jobless crisis, sees no 'Japanese' deflation
If the Labour Party won't spend, what's the point of it?
EUs unaccountability poses a danger to global economy
Roger Bootle looks to sell Capital Economics
Businesses with bright ideas 'more likely to face funding hurdles'
Saudi prince sues Forbes over size of fortune
Sir Mervyn King attacks EU financial transaction tax
Bank raises growth forecast in rare boost for economy
Heroic Spain is damned if it does, and damned if it doesn't
Foreign-born workers account for 50pc of rise in employment
Recovery hopes as Japan economy expands again
Exiting QE could 'undermine the recovery', IMF warns
One and two cent coins could disappear under EU plans
Japan storms back on weak yen but Asia trembles
There may be no halting this tax juggernaut
EU referendum row a 'distraction' from growth
Coalition minister claims he can see 'green shoots' of recovery
BoE's Weale douses Carney stimulus hopes
Brussels dismisses 'plainly wrong' IMF criticism over Greece
The European Commission has expressed "fundamental disagreement" with a "plainly wrong" IMF report that has accused the EU of sacrificing Greece to save the euro from debt crisis contagion.

The Brussels executive has responded with barely contained fury to a Fund report, drawn up by its staff in Washington, which identified "notable failures" in the EU-IMF bailouts of Greece, beginning in 2010.

The IMF's criticism centred on claims that the EU was more concerned with propping up the euro than saving Greece and failed to identify growth friendly reforms for the highly indebted southern European country.

"We fundamentally disagree," said a commission spokesman.

"With hindsight we can go back and say in an ideal world what should have been done differently. The circumstances were what they were. I think the commission did its best in an unprecedented situation."

The accusation of hindsight bias was repeated by Mario Draghi, head of the European Central Bank, which, while escaping direct IMF criticism, led the EU's refusal to consider writing down Greek debt for two years.

"Often these mea culpa are a mistake of historical projection you tend to judge things that happened yesterday with today's eyes. We tend to forget that when the discussions were taking place the situation was much, much worse. The fear of contagion and the high volatility," he said.

Officials have been stung by the IMF's criticism that the "dramatic contraction" in the Greek economy following the first bail-out in 2010 was driven by the refusal of the commission and European Central Bank to contemplate writing off debts, in the form of Greek bonds held in eurozone banks.

"An uncontrolled default of Greece in 2009 or a debt restructuring early in the programme would have had devastating consequences not just for the rest of the euro area, which is no small consideration, but also for Greece itself. This was the key element of our reasoning," said a commission spokesman.

"The euro area member states have collective responsibility for this and signed up for the measures that were taken."

In damaging conclusions the 50-page IMF report repeatedly highlighted the failure to deliver a "haircut" on Greek debt as a critical factor in undermining confidence in the eurozone and as a major contributor to the Greek economic crash.

"Not tackling the public debt problem decisively at the outset or early in the program created uncertainty about the euro area's capacity to resolve the crisis and likely aggravated the contraction in output," said the IMF report.

"An upfront debt restructuring would have been better for Greece although this was not acceptable to the euro partners. A delayed debt restructuring also provided a window for private creditors to reduce exposures and shift debt into official hands."

Commission officials, who now have new powers to impose and enforce structural reforms on eurozone countries, have been particularly angered by IMF allegations that they failed to support economic growth in Greece, charges that politically damaging amid a European backlash against austerity.

"We fundamentally disagree with the view that not enough was done to identify growth enhancing structural reforms. This is plainly wrong and unfounded. In fact, the Commission has been a major driving force behind the strong focus of the programme on structural reforms."

The commission has promised a "full report" into its work in the "troika" of the EC, ECB and IMF, currently responsible for running Greece, Ireland, Portugal and Cyprus. But, officials conceded, work on the analysis has not begun yet.

In a dig that is unlikely to heal the rift, Brussels officials have noted that while the Fund admitted breaking its own rules on loans during the Greek crisis, the commission stuck to the letter of EU law.

"We have used all flexibility possible, but we dont tweak the rules as others suggest they have been doing," said a commission spokesman.

Sharon Bowles MEP, the chairman of the European Parliament's economic and monetary affairs committee, observed that the IMF has a track record of admitting mistakes after it was too late to anything about it.

"It is all well and good of the IMF to admit that mistakes have been made. But the real question is whether lessons have been learnt," she said.

"The IMF was equally critical of the handling of the Asian crisis as it was on Greece. Cyprus was not handled efficiently either. So, are lessons really being learned?."

modern table lamps

Menu
Britain puts brake on slide in European car sales
MPs consider inquiry into London listing rules
Markets are on a crazy, sugar-fuelled journey
Help to Buy puts mortgage market at risk, says King
Sir Mervyn King attacks Osborne plan to boost housing market
UK exporters look beyond sluggish EU
BIS and IMF attacks on QE 'deeply misguided'
Germans blame eurozone crisis for Eurovision flop
'Economic case to stay in EU is overwhelming'
Inflation 'may hamper Carney, warns ITEM Club
Japan upgrades growth outlook
Paul Tucker risks row over bank rescue plans
EU arms second front in China trade war with Huawei probe
Attacks on tax avoidance 'could damage Britain'
Japanese growth could be 'sugar high'
Britain is already in trouble without the IMF making it worse
UK exit from EU would be 'loss/loss scenario', warns Goldman Sachs
Demanding clients get small firms investing at last
UK inflation: sharp fall eases household squeeze
Nigel Farage's biggest problem is Ukip doesn't do details
What next for inflation and interest rates?
Europe faces lost decade, says Mark Carney
Stocks are booming, so beware the bust
HMRC 'errors' cost country £5bn, say MPs