- ECB president says uncertainty still blights European project
- Says it's time to prove region can act with common spirit
Mario Draghi said talks over Britain’s place in the European Union offer a chance to show that the region’s politicians are committed to the future of the European project.
“A solution that would anchor the United Kingdom firmly within the EU while allowing the euro area to integrate further would boost confidence,” the European Central Bank president said at the European Parliament in Strasbourg on Monday. “Citizens and markets are too often unsure about our capacity to act jointly in a spirit of common responsibility. We should prove them wrong.”
The U.K.’s 43-year membership in the EU comes into sharper focus this month as Prime Minister David Cameron discovers whether the rest of the bloc will offer him sufficient concessions to convince the British people it’s worth staying. Tensions over issues including the relationship between euro and non-euro members need to be resolved, with an in-out referendum possible as early as June.
The surprise intervention of Europe’s most-powerful central banker has echoes of the Bank of England governor’s speech in October, when Mark Carney said that the U.K. has successfully “harnessed the benefits” from EU membership yet avoided “the drawbacks of reduced flexibility from which some continental European economies suffer.” Draghi’s concern is that the battles over Europe’s economic and monetary union, including Greece’s near-departure from the euro area last year, are showing up its frailness at a time when global risks and domestic political pressures are mounting.
“There is still political uncertainty surrounding the European project,” he said. “We are undoubtedly at a point in time when the cohesion of Europe is being tested. Many of the challenges we must confront are European, or even global in nature. And these challenges demand a strong European response.”
Draghi also reiterated the ECB’s plan to review its stimulus program for the euro area, with the possibility that it’ll be boosted at the Governing Council’s March 10 meeting. He highlighted downside risks from the emerging-market slowdown, the need for more integration in financial markets, and the need for growth-friendly fiscal policies that remain in “full compliance” with EU budget rules.
Earlier on Monday, ECB Executive Board member Benoit Coeure warned that governments must start becoming more dynamic, pushing through structural reforms and strengthening the institutional setup of the union. Methods of advancing European integration so far have not been sufficient to foster consensus on the design of economic policies, and the region is ill-equipped to deal with new challenges such as the migrant crisis and terrorism, he said.
“We are at a point where integration cannot and should not continue as a technical and technocratic exercise,” Coeure said at a conference in Budapest. “It is now time for political leaders to take up the baton, because only they will be able to convince their electorates of the need for further deepening.”