WAYNE Swan says Australia's economy faces a re-run of global financial crisis-style conditions as a result of European economic upheaval. In his starkest warning to date on the dangers presented by the unfolding European debt crisis, Mr Swan said Australia could expect ongoing economic instability and a slump in federal revenues.
“If the worst fears for Europe are realised this time, the impacts on our own economy could be just as severe as those in 2008,” Mr Swan said in a ministerial statement to parliament today.
“Despite our fundamental strengths, we know that the Australian economy and our budget will not remain untouched from global instability.”
The Treasurer, who flies to Paris tomorrow for a meeting of G20 finance ministers, said international engagement was now just as crucial as it had been during the GFC.The global financial crisis resulted in sharply lower domestic growth, a credit squeeze and a $70 billion stimulus program that wiped out the surplus.
Mr Swan said the world was entering a “dangerous new phase” that would take a long time to pass.
“Even with action in Europe and the US, it is inevitable that this global volatility will impact us here and that we will continue to see periodic bouts of instability,” the Treasurer said.
“The domestic fallout from these global events is most evident in our share market, with Australian shares falling to two and a half year lows recently, though recovering somewhat last week.
“Not surprisingly, global uncertainty and financial market turbulence have unsettled businesses and consumers and reduced confidence will have consequences for our own economy.”
Mr Swan, who was recently named as Euromoney's finance minister of the year, said he would urge concerted action by his European counterparts ahead of the G20 leaders' summit to be held in Cannes in a month's time.
“My clear message will be that both individual and collective action is needed to address global financial market volatility and put the global economic recovery back on track,” he said.
He said developed countries, particularly in Europe, needed to put their budgets on a sustainable footing, while tough decisions were also required in the United States on both spending and taxes.
“If the worst fears for Europe are realised this time, the impacts on our own economy could be just as severe as those in 2008,” Mr Swan said in a ministerial statement to parliament today.
“Despite our fundamental strengths, we know that the Australian economy and our budget will not remain untouched from global instability.”
The Treasurer, who flies to Paris tomorrow for a meeting of G20 finance ministers, said international engagement was now just as crucial as it had been during the GFC.The global financial crisis resulted in sharply lower domestic growth, a credit squeeze and a $70 billion stimulus program that wiped out the surplus.
Mr Swan said the world was entering a “dangerous new phase” that would take a long time to pass.
“Even with action in Europe and the US, it is inevitable that this global volatility will impact us here and that we will continue to see periodic bouts of instability,” the Treasurer said.
“The domestic fallout from these global events is most evident in our share market, with Australian shares falling to two and a half year lows recently, though recovering somewhat last week.
“Not surprisingly, global uncertainty and financial market turbulence have unsettled businesses and consumers and reduced confidence will have consequences for our own economy.”
Mr Swan, who was recently named as Euromoney's finance minister of the year, said he would urge concerted action by his European counterparts ahead of the G20 leaders' summit to be held in Cannes in a month's time.
“My clear message will be that both individual and collective action is needed to address global financial market volatility and put the global economic recovery back on track,” he said.
He said developed countries, particularly in Europe, needed to put their budgets on a sustainable footing, while tough decisions were also required in the United States on both spending and taxes.
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