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Swiss to feel repercussions of euro woes-president

Published 05/22/2010, 05:58 AM
Updated 05/22/2010, 05:59 AM

* Leuthard sees low growth for whole EU over next few years

* Says euro rescue package won't spur countries to cut debt

* Swiss franc safe haven status to strengthen further

ZURICH, May 22 (Reuters) - Switzerland will feel the consequences of the euro crisis as growth in the whole of the Europe area is expected to be sluggish over the next few years, the Alpine country's president was quoted on Saturday as saying.

Swiss Economy Minister Doris Leuthard, who holds the rotating post of Swiss President this year, said in an interview with Swiss newspaper Neue Zuercher Zeitung that she was more worried about the overall economic impact of the crisis than wild currency fluctuations.

"In June the new economic forecasts will draw the first conclusions on the repercussions (of the euro crisis)," Leuthard said. "I am not chiefly worried over the currency problems. More worrisome is the fact that the weakness of the euro and the rescue package that goes with that will weigh on the economic development of the whole European continent.

"We have to get used to the idea of very moderate economic growth in the European Union area over the next years," she said.

Leuthard said the Swiss National Bank together with the Finance Ministry and Economy Ministry had all intensified monitoring of the situation, which has seen the franc rallying to all-time highs against the euro -- the currency of its main trading partners -- this week.

Leuthard expressed concern about the 750 billion euro ($938 billion) EU emergency debt package to avert an unprecedented crisis for the euro zone. Germany's parliament gave its key support to the austerity plan on Friday. [ID:nSGE64K06K]

"(The package) represents an implicit state guarantee," she said. "There will be therefore less pressure on heavily-indebted euro zone nations to do their homework and introduce the necessary reforms.

"This creates uncertainty and dampens economic growth, something that Switzerland will also feel. There is a risk that the Swiss franc's safe haven status will further strengthen." (Writing by Lisa Jucca, editing by Mike Peacock)

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