BIRMINGHAM, England, Nov 18 - U.S. Treasury Secretary John Snow warned on Tuesday that economic growth in much of Europe and Japan was lagging and urged a determined bid to step up the pace of expansion. "As we look at the global economy today, it is hard to escape the conclusion that growth has been far too uneven -- particularly in the largest industrial nations," Snow said in prepared remarks for delivery to senior British industrialists. He told the Confederation of British Industry's annual meeting the U.S. economy "is now growing at a healthy pace" but the economies of most other key industrial nations were not. "Britain has demonstrated consistent growth, but the other major world economies -- particularly Japan, Germany and France, are operating well below their potential," Snow said, adding that this was a burden for the global economy because weak performance in one region affects others' ability to grow.
"We must all take steps to accelerate growth, especially in those economies that are lagging," the U.S. Treasury chief said, noting that finance chiefs from the Group of Seven -- the United States, Britain, Canada, France, Germany, Italy and Japan -- have acknowledged they need to tackle barriers to expansion.
CUT RED TAPE
"Though we all face challenges to faster growth, the issue is most pressing for the major economies in Europe where growth is stagnant," the U.S. Treasury chief said. He noted that Britain's Chancellor of the Exchequer, Gordon Brown, had written that less regulation and more flexibility in hiring and firing would foster more nimble economic planning. Snow's address to the business lobby group was the highlight of a four-day swing through France and Britain that included meetings on Monday with British finance and corporate leaders and with Bank of England Governor Mervyn King. He said the U.S. economy, after weathering shocks including the attacks of September 11, 2001, a stock market collapse and a welter of corporate scandals, was now back on its feet. "As various private-sector economists have remarked recently, the U.S. recovery has real muscle to it and is sustainable," Snow said, noting that demand that had weakened in the second half of 2000 has only recently come back.
INHERITED PROBLEM
Snow and other U.S. administration officials have been careful to note that when President George W. Bush took office at the beginning of 2001, the economy was already on the wane from the boom years of the 1990s. Millions of U.S. manufacturing jobs have been shed since Bush came to office, a potential issue for next year's presidential elections, but Snow said "signs are pretty good that we have turned the corner" on job creation. However, he said businesses were doing all they could to curb expenses and to avoid putting unused factories into operation until they were certain demand will hold up, which has been a damper on hiring. In addition, increased productivity -- a gauge of hourly output per worker -- has been a factor. "Higher productivity is a good thing," Snow said. "It leads to higher real wages and greater disposable income. But it has also slowed down the job creation process."//