Economists Question EU Rescue Plan

Some European economists welcomed the European Union's economic stimulus plan recently launched, but also questioned.

The EU's plan to cope with the recession will be funded by governments. In this plan, the EU urged member countries to stimulate consumption by lowering VAT.

EU president Barroso said that the auto industry, which will have a significant impact on the European economy, will receive special attention. The European Union will take 5 billion euros from the Euro 200 billion stimulus plan to rescue the European auto industry. The industry has experienced a six month recession and its sales volume dropped to 14.5% in October.

"We propose to coordinate actions among member countries in stimulating the economy.

We will make the automotive industry a more modern and environmentally-friendly industry, "Barroso said.

However, many analysts are not optimistic about the EU's bailout plan, and argue that it is difficult for the plan to play a role in dealing with the recession in the short term.

Professor Drigg of the German economic research institute points out that the EU's practice of temporarily reducing VAT to stimulate consumption is unlikely to be effective.

"Since the summer, the European Union has greatly increased the purchasing power of personal consumption and family by lowering oil prices, so there is limited space to stimulate consumption to grow significantly again.