Italy’s Mario Monti makes the case for growth
By Howard Schneider,
Italy’s efforts to curb public debt will be for naught unless the nation’s economy starts growing again, Prime Minister Mario Monti said Thursday in calling for Germany and other European nations to turn their focus to economic renewal.
Italy under Monti is on track to balance its budget next year and has seen its borrowing costs ebb from the crisis levels of last fall that forced Prime Minister Silvio Berlusconi to resign. It is also expected to slip back into recession, with the International Monetary Fund projecting that Italy’s economy will shrink more than 2 percent this year.
“Growth will be necessary to make the improved budget situation sustainable,” Monti said in an address at the Peterson Institute for International Economics. “This is a moment for all of us to concentrate on growth imperatives.”
Monti, a technocrat economist recruited to revive Italy’s finances, is in Washington for a meeting with President Obama and as part of a push to reorient the debate over Europe’s future toward strategies for economic growth.
European nations have gone through a year of sharp budget cuts that have eroded long-standing and often generous retirement and other public benefits.
Considered necessary to tame rising levels of public debt, “fiscal adjustment is not sufficient” to restore the region’s economy, Monti said.
In particular, he said that the continent needs to renew progress toward a true common market in which people can move easily to open jobs, investment capital can move across borders and local regulations are relaxed.
He singled out Germany, which has been among those pressing hardest for new fiscal rules but was recently cited by the European Commission for failing to open up its service sector to outside investment in line with a Europewide agreement.
Just as officials in Berlin took the lead in developing a new treaty on fiscal rules, Monti said they should push for policies that would help the region start growing again.
The euro zone “is a jigsaw with a couple of pieces missing,” Monti said. “We have to have a single market.”