ECB’s Mersch Adds Voice in Call for More Fiscal Stimulus

(Bloomberg) --

European Central Bank Executive Board member Yves Mersch added his voice to a call for more supportive fiscal policy amid a global economic slowdown.

“The ECB does not operate in a vacuum and other economic policies matter too” to bolster growth and deliver inflation in line with the institution’s mandate, he said in Luxembourg Monday. “A better policy mix, including fiscal policy, structural reforms and prudential measures, can help achieve this objective faster and with fewer side effects.”

Despite calls from various ECB officials including President Christine Lagarde for governments with fiscal space to start spending more, politicians have been dragging their feet.

Lagarde Eyes Dozen Euro Members With Precious Room to Spend More

In Germany, Europe’s largest economy, Finance Minister Olaf Scholz has said the government is ready to act in moments of crisis but for now the country is in a “stable economic situation.” Bundesbank President Jens Weidmann has repeatedly argued against stepping up fiscal spending.

While a recovery in German factory orders hinted at improving prospects, industrial production has continued to worsen.

“In view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space that are facing a slowdown should act in an effective and timely manner,” said Mersch.

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