Italy’s Prime Minister Mario Monti addresses the audience at the start of the 10th European Business summit in Brussels, Thursday. — Reuters
BRUSSELS — Italy’s Prime Minister Mario Monti backed a call on Thursday to reorientate the EU’s sick economy towards growth, saying that concentrating on budgetary discipline alone could leave the continent in a prolonged slump.
Responding to the European Central Bank’s message that it was up to leaders to pull Europe out of its devastating debt crisis, Monti said countries needed “new policy skills” as well as structural reforms and government spending cuts.
“I believe that is the factor which is in shortest supply at the moment in spite of so many good individual and collective efforts,” Monti told business leaders in a speech in Brussels.
“If there is no demand, growth will not materialise. All the reforms we are putting in place now are deflationary,” he added.
ECB President Mario Draghi called on Wednesday in Brussels for a “growth compact”, which was also welcomed by French presidential front runner Francois Hollande and other European leaders.
“I am pleading for a European pact on growth,” Belgian Prime Minister Elio Di Rupo told the conference before Monti’s address.
European Council President Herman Van Rompuy, who chairs EU leaders’ summits, said growth was now “the highest priority for European leaders” and that he may convene an informal meeting of leaders at some point ahead of the EU summit of heads of state and government on June 28-29.
Monti was careful not to criticise the German-led drive to rein in Europe’s debts and fiscal deficits, which have sapped investor confidence, especially in the 17-nation euro zone.
“We reject the old style of intentional growth through expansionary deficits... ephemeral deficit spending,” he said.
But with the euro zone slipping into its second recession in just three years and with unemployment at record highs, politicians sense that recently implemented structural reforms to labour, goods and services markets, may be moving too slowly.
“Structural reforms... will make a difference over time,” Van Rompuy said. “We must tell the truth. There are no magic formulas, reforms take time and so does their impact on jobs and growth.” — Reuters