Babacan warns EU of long-term recession risk

European Union countries should act in solidarity, otherwise the region risks a long-term recession, Deputy Prime Minister Ali Babacan said yesterday at the “Building Istanbul as a Key Financial Center" conference, predicting a gloomy outlook for the market. “No country in the eurozone should be left to its own devices. [The European Union] affords a guarantee to countries when they are accepted into the zone. Otherwise why would they share a currency? It means they will not be left alone when [times are] difficult. Every country has to do what is necessary, and solidarity is a must for the eurozone. If the current situation continues a long-term recession may follow," Dogan news agency quoted Babacan. “People are talking about fiscal consolidation in Europe again. And there are heavy regulations, which may kill the expected growth for a long time. One should be very careful about it," Babacan said, adding that the cost of bankruptcy for a country is much higher than that of bailing it out. Finance Minister Mehmet Simsek, IIF Managing Director Charles Dallara, Central Bank Gov. Erdem Basci and Akbank Chairman Suzan Sabanci Dincer also participated in the conference.