(Bloomberg) -- European Central Bank policy maker Pablo Hernandez de Cos issued a strongly worded warning to leaders that they must act to prevent the region sliding into a lengthy period of low economic growth.
The Bank of Spain governor, in an end-of-year article, listed a host of challenges including the proliferation of protectionism, the struggles of the auto industry, aging populations and stagnating productivity.
“This worrying environment means that a reconsideration of the macroeconomic policy framework in Europe is urgent and necessary, in order for the response to the challenges to be appropriate,” he said.
The euro zone has struggled in 2019 with a manufacturing slump, centered on Germany’s car industry as it strives to switch to electric, that threatens to spread into the services sector as it hits jobs. While the U.S.-China trade war has eased and the U.K.’s Brexit plans are moving forward, both remain concerns that have damped business confidence.
De Cos said the ECB is doing its bit with monetary stimulus that should add around 2.5 percentage points to GDP growth from 2016 to 2021. But he echoed a longstanding plea from the central bank for politicians to step up their own game.
“In the current euro-area framework, budgetary policy decisions are the responsibility of national governments, which makes a coordinated response more difficult,” he said. “It is worrying, in this connection, that the euro area still does not have fiscal policy tools -- like those in the U.S. -- capable of contributing to offering a common response to the foregoing challenges and promoting a greater degree of cyclical stability for the Union as a whole.”
The article was first published in El Economista newspaper on Tuesday.
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