Euro Nations Diverging After Troubled Decade, Italy's Tria Says
(Bloomberg) -- Euro-area governments haven’t learned the lessons of the financial crisis and are failing to promote policies aimed at convergence amid global economic uncertainty, the Italian finance minister said.
The monetary union’s “second decade showed a deterioration of the euro area performance which eroded the political and social consensus,” finance chief Giovanni Tria told a panel discussion at the Gaidar Forum in Moscow on Tuesday. “Ten years after the financial crisis we have not figured out what we need to do.”
The minister’s criticism of the euro region setup follows data showing an economic slowdown for the bloc with its powerhouse Germany narrowly avoiding recession at the end of 2018 and Italy risking a slump. European policymakers have expressed growing worries over global protectionist policies and the prospects of a U.S.-China trade war.
“Until a year ago the world was enjoying a synchronized global acceleration,” Tria told an audience of Russian and international policymakers and economists. “Now the state of the world economy has changed and we’re facing uneven momentum, difficulties coordinating monetary policies”
About the same time that Tria was speaking, European Central Bank President Mario Draghi told the European Parliament in Strasbourg that “in some countries not all of the euro’s benefits have been realized in full.” Draghi said that this was due both to the lack of reforms at the national level and to the fact that the monetary union “remains incomplete.”
In his talk in Moscow Tria wondered aloud whether the monetary union’s restrictions enable it to face those and other risks.
“The trust we put in our single currency doesn’t prevent us from asking if the policies supporting the euro after 20 years have promoted convergence,” he said. He mentioned the risk of “potential collapse of the European Union if its policies continue to create divergences and not convergence among member states.”
In Italy, gross domestic product per person has stagnated since the euro became the official currency in 1999, unemployment has barely fallen, and productivity has declined.
Tria also addressed the challenges posed by the forthcoming exit of the United Kingdom from the EU and by the migration flows from Africa.
“We focus on Brexit, but we should do something different than fighting for the room left vacant by the outgoing tenant, we see migration issues only as a repartition puzzle and we have an obsession on procedures, while we don’t dare look at the bigger picture,” he said.
The finance chief complained that the EU nations are failing to develop “a coherent strategy to build back our technological sovereignty” and “to bring back into our social fabric millions of people that were put aside by the crisis.”
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