|
Unemployment is "a tragedy, and youth unemployment is an even bigger tragedy," Draghi added. Economists say that ultimately growth is the only way to reduce the large debt burdens weighing on eurozone governments such as Spain and Italy, and the three countries that have needed bailout loans from other countries: Greece, Ireland, and Portugal. Growth increases tax revenues as more people get jobs and businesses make more profits. Meanwhile, a bigger economy makes the debt smaller by comparison. Analyst Christian Schulz at Berenberg Bank said the ECB was pushing governments to take action rather than offering help itself. "ECB inaction keeps the pressure on governments to continue structural reforms to improve growth prospects," he said, http://www.topinstrum.com/forum.php?mod=viewthread&tid=587534 - http://www.topinstrum.com/forum.php?mod=viewthread&tid=587534 . Reforms such as making it easier to lay off established workers, http://sns.fjlearning.com/bbs/viewthread.php?tid=11784673&extra= - http://sns.fjlearning.com/bbs/viewthread.php?tid=11784673&extra= , so that companies will be more willing to hire young people when times are good, help governments as they don't involve an increase in spending. But the measures often run into opposition from entrenched interest groups. For example, Italy's Prime Minister Mario Monti could pass only a watered-down reform of rules that force companies to take back laid off workers if a court rules against them a key deterrent to more hiring. Draghi's comments come as Europe's leaders appear to be reconsidering harsh austerity as a way of combating the crisis. While governments are still under pressure to cut deficits, eurozone finance ministers meeting earlier this week indicated they were now willing to give countries more time to meet European Union requirements that they close their deficits, lessening the impact of cuts on growth. Draghi said the ECB's latest, lower, http://www.cheaptomsshoessalei.com - toms shoes , economic forecast for this year was due to the impact of a worse-than-expected contraction of 0, http://game-rulez.net/facebook/index.php/members/home - http://game-rulez.net/facebook/index.php/members/home .6 percent in the fourth quarter carrying over in this year. He said his forecast for a gradual recovery in the second half of the year "remains unchanged." Also Thursday the ECB decided to leave its key rate unchanged at a record low of 0.75 percent. The economy is weak enough for another rate cut, economists say, and inflation is low at 1.8 percent, http://www.cheaptomsshoessalei.com - toms shoes sale , meaning there's little risk a cut would worsen inflation. The ECB maintains that its monetary stance is "accommodative," meaning interest rates are low enough to spur growth. Since Draghi took over as ECB president in November 2011, the bank has cut rates, flooded the banking system with cheap credit, http://www.cheaptomsshoessalei.com - cheaptomsshoessalei.com , and shored up government bond prices by offering to purchase unlimited quantities of bonds for countries that agree to reduce their deficits. Nonetheless, the ECB has not gone as far as the Bank of England, Bank of Japan and the U.S. Federal Reserve, all of which have pumped newly created money into their financial systems to try to boost asset prices and spur growth. Unlike the Fed, the ECB's mandate is to focus on controlling inflation first, and only then think about reducing unemployment. Yet with inflation low, it is free to consider further moves. An insider's guide to politics and policy, available on the iPad or as a PDF down
|