EU president, Monti call more stimulus naive, growth difficult
BRUSSELS EU president Herman Van Rompuy said on Thursday that there was no simple answer to getting the eurozone back to growth, with the prospect of more stimulus spending unrealistic.
Van Rompuy, who has been tasked with leading eurozone economic planning by EU heads of state and government, said there was now “hardly any room for stimulus,” labelling such calls “schizophrenic.” With the eurozone likely already in recession as two years of austerity measures bite, he said the economic reforms adopted to tackle the debt crisis will take time to impact on growth and jobs.
As debate on the issue hots up, Van Rompuy also told a Brussels conference organised by employers’ federation Business Europe that he might call an informal summit on the issue.
“I do not exclude convening an informal leaders’ dinner at an earlier date” than the planned June 28-29 summit meeting planned in Brussels, he said.
European Union leaders face growing calls to act, with voters restive as series of austerity measures intended to stabilise strained public finances has also slashed growth and jobs.
The frontrunner in the French presidential race, Socialist Francois Hollande, has said he will press for growth measures to go alongside the eurozone’s tighter spending controls if he wins the May 6 election.
Italian Prime Minister Mario Monti meanwhile insisted that stimulus spending would deliver only “illusory” results, warning the gathering that Europe “needs to continue to avoid policies that would only in an ephemeral way give the impression” of growth.
Monti said the EU “has to drive the policies to enable growth from structural reforms,” citing changes to labour laws and the removal of barriers to cross-border services trade.
Monti maintained that “old-style Keynesianism,” or government spending to boost demand, must be avoided as “it would produce no good for Europe’s economy, or for national economies for that matter.” Where he said the EU and its leaders could focus such thinking was on “cross-border infrastructure investment,” a theme the European Commission has been pushing for the past year, focused on energy and digital connections.
Such comments put Monti on the same page as European Central Bank chief Mario Draghi and German Chancellor Angela Merkel, who both emphasised “growth” objectives on Wednesday — but not at the expense of necessary austerity.
Belgium’s Socialist Prime Minister Elio Di Rupo said Europe had to find ways to optimise “limited resources” and “find new instruments for growth.”