ECB President Mario Draghi said his bank cannot resolve the eurozone’s problems on its own. Talking to lawmakers in Paris, he urged France to remove obstacles to higher employment in the country.
European Central Bank President Mario Draghi told French parliamentarians on Wednesday he would continue to do everything in his power to get the eurozone's economies back on track. But he insisted that national governments had to do their homework and provide the legal framework for more growth.
Draghi told lawmakers in Paris that France needed to do more to make its economy competitive. “It's important to acknowledge that there are limits to what the ECB's monetary policy can achieve,” Draghi said in his speech.
He urged France to streamline its excessive labor market regulations which he said had contributed to high levels of joblessness and youth unemployment in particular. The ECB chief also suggested that the French government simplify the nation's complex taxation system and do away with over-regulation that kept distorting competition in a free market.
Concessions down the road
Draghi's comments came as the national statistics agency, Insee, confirmed earlier estimates that France had slipped into recession. It said the country's gross domestic product (GDP) dropped by 0.2 percent in both the final quarter of 2012 and the first quarter this year.
In acknowledging France's difficulties to leave the debt crisis behind, the European Commission had given the country more time to bring down public deficits, meaning that Paris now has until 2015 to push its annual shortfall below the EU-mandated threshold of 3 percent of GDP.
The EU executive said in its spring forecast it expected France to log a deficit of 3.9 percent this year, followed by a shortfall of 4.2 percent in 2014.
hg/dr (AFP, AP, Reuters)