‘Grexit’ no eurozone crisis: ECB member
‘Greece is a problem for Greece itself ’
MONTREAL • Greece leaving the eurozone in the near future would not cause a crisis among the currency bloc’s other countries, says Christian Noyer, a member of the European Cen- tral Bank government council.
“The situation today is totally different from what it was a few years ago,” Noyer said at the International Economic Forum of the Americas in Montreal on Monday. “The problem of Greece is a problem for Greece itself.”
Noyer, who is also the governor of the Bank of France, said it was “extremely urgent” Greece reaches a deal with its international creditors and realistically it had only “a matter of days” since any lateJune agreement would need to be approved by various European legislatures.
“I am anxious for Greece because I think their problem is not a problem of their debt. Their problem is to restart their economy, and that requires them to proceed with reforms,” he said. “We have not seen a convincing bunch of proposals that would be able to re- start the economy.”
The country’s anti-austerity government, elected on a platform that it would stand up to Greece’s creditors and not make concessions on Greece’s generous social safety net, is now showing signs it may have to swallow some painful reforms.
Noyer said it’s also crucial the Greece doesn’t destroy reforms put in place over the past several years.
“If they don’t proceed with that there is no chance that growth resumes in Greece,” he said.
He said other European countries have strengthened their economies and have put in place “powerful firewalls” such as a 500 billion euro bailout fund to help prevent a future crisis.
Noyer said that other countries that accumulated unsustainable levels of public and private debt — such as Ireland, Spain and Portugal — have fixed their fiscal weakness through structural reforms. He said Ireland and Spain now even have the highest growth rates in Europe.
“We have totally reformed governance in the eurozone (...) The market knows that,” Noyer said. “The rebound is remarkable.”
Last week, the ECB raised its inflation forecast to 0.3 per cent for this year, having previously put it at zero, saying that its trillion-euro-plus asset buying program was paying off but had to be seen through.
ECB chief Mario Draghi said recovery was still expected to broaden through 2015 though there were some signs of losing momentum.
Elsewhere in Europe, Noyer said it may be time for citizens to start letting go of their famously generous amount of holiday time.
In France, he said the option to work Sundays remains highly regulated, something that needs to change, particularly in sectors such as tourism. “The competitiveness of enterprises is weakened by too short working hours. It means jobs are working outside the country,” he said.
“There are clearly opportunities to immediately create or develop opportunities that create employment,”
Noyer said French workers also have a relatively early retirement age, which has made pension system “impossible to attain,” in light of increasing life expectancy.