Ericsson chairman sees risk of credit freeze in Europe

The European debt and banking crises risk turning into a credit freeze if leaders don't take decisive action, the chairman of L.M. Ericsson Telephone Co., Leif Johansson, said Wednesday.

Johansson said there are "considerable downside risks" of a credit freeze. "Those of us around in 2008 to 2009 saw how quickly liquidity froze up," he said at an event organized by the European Round Table of Industrialists, a business lobby group.

A liquidity freeze will drive markets down. I don't think it will happen like before but the risk is there."

Johansson heads the business lobby group. The Ericsson chairman said the ability of regional policy makers to get a grip on the crises in coming weeks will be key as to whether the European economy falls back into recession.

"I wouldn't say there is a recessionary smell in the air," he said."But we really have to see something happen.

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