EUROPEAN CENTRAL Bank chief Mario Draghi has called on EU leaders to place economic growth at the centre of the battle against the financial crisis and described the stability treaty as the “starting point” on the path to a fiscal union in the euro zone.
Mr Draghi insisted, however, that there was no conflict between the emphasis on growth and the need for governments to rein in their budget deficits and debt.
Suggesting a fiscal union could come about within 10 years, Mr Draghi said this would involve the transfer of sovereignty from member states to a central authority. He described this as the political dimension of the growth agenda, in addition to reforms in product and labour markets and increased infrastructure investment.
Mr Draghi did not mention common tax or welfare policies, ideas sometimes linked to the notion of a fiscal union. Still, he said, clarity about a “common European future” was probably the most important element of the drive to foster growth.
He was speaking in Barcelona after the ECB governing council kept its main interest rate at 1 per cent.
Mr Draghi’s intervention comes amid a growing clamour for new growth policies, championed by Italian technocrat premier Mario Monti and supported by French socialist François Hollande in his election campaign.
At the same time, he indicated there was little scope for distressed countries to deviate from their austerity policies. The ECB chief was not asked about the Irish referendum and did not refer to it.
“I think that collectively we have to specify a path for the euro. How do we see ourselves in 10 years from now? What has to be in place in 10 years?” he said. “We want to have a fiscal union. We have to accept the delegation of fiscal sovereignty from the national governments to some form of central [authority].
“But how do we get there? Certainly to talk about a transfer union cannot be the starting point of this path. That’s why the fiscal compact is so important. That is the starting point.
“But once we have specified the starting point we have to also highlight what this path is. What conditions have to be in place to see what happens to the euro in 10 years?
“In other words: clarity about our future, about our common European future, is one important ingredient of growth,” Mr Draghi said.
He said there was no contradiction between the fiscal compact and his call for a new EU growth compact. “In fact, growth is sustainable in the long run if it is based on a variety of pillars. One of them is fiscal stability,” he said. A growth compact would necessitate more structural reforms in all euro zone countries, Mr Draghi said. This called for a common European discipline, with monitoring, along the same lines as increased budgetary surveillance.
