European officials must focus on policies to boost growth or the euro area will face a “perpetual problem,” said Goldman Sachs Asset Management Chairman Jim O’Neill.
“They’ve got to shift their attention away from just austerity,” O’Neill said in an interview with Bloomberg Television today in Cernobbio, Italy. “There has to be something to get more broad growth, otherwise it’s going to be a perpetual problem.”
European finance ministers are meeting in Copenhagen today as they seek to balance international demands for a more powerful war chest with opposition in donor countries led by Germany to providing additional aid for underperforming countries on Europe’s fringes.
Whereas some countries such as Italy are showing “genuine signs” of structural reform, there are “many ongoing problems” in the rest of the euro area, O’Neill said.
“There’s a hint that Italy has been stabilizing but we do need more than that,” he said. “Short of something coming from the rest of the world as an external stimulus it’s tough to see a lot of growth in Europe.”
O’Neill said that recovery in the U.S. may help drive global growth and that the country’s housing market “is turning.”
“The U.S. has got some legs for at least for the next couple of quarters,” he said. “Big picture, there remain all sorts of issues but I think the U.S. is going to continue to positively surprise.”