Italy’s Prime Minister Mario Monti is the latest to say that the focus has to change from austerity moves to growth stimulation if Europe is to avoid a prolonged slump.
Speaking at a business leaders conference in Brussels, Monti said countries needed “new policy skills” as well as structural reforms and government spending cuts: “We must not neglect that structural reforms per se will never deliver growth. Because, if a country becomes more productive and competitive, but there is no demand for its products, domestically or around it, growth will not materialise.”
Monti, and other leaders at the conference, did not offer any immediate, concrete steps that might quickly revive the eurozone’s economy
Europe is struggling to strike a balance between austerity and growth as it tries to counter the effects of a decade of runaway spending while grappling with recession.
With investors driving up borrowing costs for heavily indebted Spain and Italy, eurozone countries have signed up to a German-driven fiscal compact to enforce debt and deficit-cutting rules more strictly to try to win back lost market confidence.
Monti was careful not to directly criticise the German-led drive to rein in Europe’s debt. He said revising the fiscal compact, as the Socialist front runner in the French presidential election Francois Hollande has vowed to do if elected, was not on the European agenda.
Another conference participant, European Council President Herman Van Rompuy, said growth was now “the highest priority” and that he may convene a meeting of leaders to discuss that before the EU summit of heads of state and government on June 28-29.