U.S. Treasury Secretary Jack Lew has renewed calls for Europe to pursue growth-boosting policies rather than austerity in a press conference with French Finance Minister Pierre Moscovici in Paris.
On the first day of his three-day trip to France, Germany and Portugal, Lew said Europe needed a growth plan "rooted in investment and demand".
"Obviously we have been, over the years, concerned about maintaining demand in Europe and around the world. We think it is important here in Europe, in the U.S. and in Asia. We look at a growth agenda and it has to be rooted in investment and demand," he told journalists at the Parisian Ministry of Economy and Finance on Tuesday.
"There needs to be some more growth in Europe and in Asia and we are doing are best to promote growth in U.S."
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Jack LewPete Marovich | Bloomberg | Getty Images
Lew's visit to Europe is his fourth since taking office in February. Since his appointment, he has consistently pushed for European countries to take a "balanced approach" to reigniting their economies, paring measures to combat crippling high deficits and debts with those aimed at spurring consumer spending and investment.
"We have seen some backing-off of short-term austerity measures, some commitment to increasing demand and public spending and some focus on structural reforms," said Lew on Tuesday.
"We will continue to make the case… that short-term demand has to be part of the agenda."
His calls for expansionary economic policies may garner more attention given the release of weak euro zone inflation data on Tuesday. Consumer prices rose by only 0.8 percent year-on-year in December, down from 0.9 percent in November, adding to concerns the region may be heading towards a period of deflation.
In a comment that some will view as aimed at Germany, Lew noted that "some countries had more capacity to stimulate growth and demand than others". Germany has been criticized by both the European Union and Lew for relying on export-led growth rather than attempting to foster domestic demand, allegedly at the expense of balancing global trade and capital flows. The country ran a trade surplus for an eighth consecutive year in 2013.
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In contrast, France's economic policies were praised by Lew on Tuesday, despite a number of indicators suggesting its economy is stumbling. For instance, PMI (purchasing managers' index) data out on Monday showed that service sector and manufacturing activity in France declined further in December, and at a faster rate than in November.
But Lew insisted: "France has taken some notable steps to sustain demand while making structural reforms that have medium- and long-term impact. I am confident that the government remains committed to doing what it takes to foster recovery."
The visit by Lew came at an awkward moment for the French government, after two executives from U.S. tire manufacturer Goodyear were barricaded in a factory in the French city of Amiens amid a dispute about its upcoming closure. The executives were released on Tuesday afternoon by French police, but the incident is one in series of "boss-nappings" that have hit the country since the financial crisis.
Following his visit to France, Lew will travel to Berlin to meet with German Finance Minister Wolfgang Schauble on Wednesday. He will then head to Lisbon, meeting with Portuguese Finance Minister Maria Luis Albuquerque on Wednesday evening, and Prime Minister Pedro Passos Coelho and Deputy Prime Minister Paulo Portas on Thursday.
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Ahead of Lew's visit, the U.S. Treasury described Europe as "among our closest and most valued allies" in a blog post on its website.
"The success of the European region is critical to the United States and the global economy more broadly," wrote Daleep Singh, the Treasury's deputy assistant secretary for Europe and Eurasia, on Monday.
"For this reason, throughout his time at the Treasury, and before that as White House Chief of Staff, Secretary Lew has closely engaged with his European counterpart to discuss efforts to encourage a robust recovery in the region."
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