VIENNA: Reforms to cut public and private debt in euro zone countries could take up to a decade to have a sustainable effect on growth in the bloc, the head of the Eurogroup's working group told a newspaper.
"The euro crisis is behind us but we are confronted with a structural growth crisis," Thomas Wieser, who heads the working group that prepares decisions at meetings of the euro zone's finance ministers, told Austria's WirtschaftsBlatt.
"The steps we have missed in adjusting to the globalisation of the past 25 years must be made up for, in that many important sectors of our economy must reduce their debt levels," he told the business newspaper in an interview published on Friday.
"It could take up to 10 years for such reforms to bite."
Economic growth in the 18-nation euro zone slowed to 0.2 per cent in the first quarter, after a 0.5 per cent increase in late 2013, illustrating the fragility of the bloc's recovery.
Euro zone policymakers are debating relaxing fiscal rules to help growth, and French officials have called on the European Central Bank to weaken the euro to boost exports.
But Wieser said monetary policy alone could not lead to balanced growth, echoing comments made by Germany's finance minister and central bank chief last week. Wieser said it would make sense to link reform measures to other aspects of economic policy, such as fiscal policy.
"There could be more leeway in fiscal policy if reforms were executed effectively," he said.
"There is more leeway than many commentators know. But there won't be deadline extensions without good economic reasons."
indiatimes.com
"The euro crisis is behind us but we are confronted with a structural growth crisis," Thomas Wieser, who heads the working group that prepares decisions at meetings of the euro zone's finance ministers, told Austria's WirtschaftsBlatt.
"The steps we have missed in adjusting to the globalisation of the past 25 years must be made up for, in that many important sectors of our economy must reduce their debt levels," he told the business newspaper in an interview published on Friday.
"It could take up to 10 years for such reforms to bite."
Economic growth in the 18-nation euro zone slowed to 0.2 per cent in the first quarter, after a 0.5 per cent increase in late 2013, illustrating the fragility of the bloc's recovery.
Euro zone policymakers are debating relaxing fiscal rules to help growth, and French officials have called on the European Central Bank to weaken the euro to boost exports.
But Wieser said monetary policy alone could not lead to balanced growth, echoing comments made by Germany's finance minister and central bank chief last week. Wieser said it would make sense to link reform measures to other aspects of economic policy, such as fiscal policy.
"There could be more leeway in fiscal policy if reforms were executed effectively," he said.
"There is more leeway than many commentators know. But there won't be deadline extensions without good economic reasons."
indiatimes.com
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