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Europe must shift from constraint to growth, says minister

Polices now needed to stimulate economic expansions, Padoan

28 March, 15:27
Europe must shift from constraint to growth, says minister (ANSA) - Rome, March 28 - The time is ripe to change the European policy agenda in terms of supporting growth rather than focusing on spending constraints, Economy Minister Pier Carlo Padoan said Friday.

"I think it's time to say that we need to change the direction of the economic policy agenda in Europe," Padoan said at a conference at LUISS university in Rome. "Enormous efforts" were made, following the sovereign debt crisis that shook the continent, to control spending, reduce debt and restore investor confidence in Europe, helping to lower interest rates, he said.

Those achievements must not be squandered, he noted.

But the time has come to focus on measures to encourage sustainable economic growth over the next two decades, said Padoan who was, until recently, chief economist with the OECD.

"We must begin to think about what it means to generate growth," he said.

Almost all countries in Europe will show some economic growth this year, early steps towards moving beyond recession and damage that has caused, said Padoan.

But leaders should aspire to more than simply eking out low levels of growth.

"I'd like to think that in the coming months there would be a structural change (towards) positive growth and employment," said Padoan.

The difference between those scenarios comes down to political choices that Europe must face in a serious, "non-ideological" manner.

Italy's gross domestic product fell by an average of 1.9% last year, but began to recover in the third-quarter and agencies including the IMF forecast growth of 0.6% this year, rising to 1.1% in 2015. GDP fell 2.4% in 2012, according to revised data from national statistical agency Istat.

To boost growth, Premier Matteo Renzi has been announcing a wide range of economic and labour market reforms, including public-spending cuts to free up cash to finance income tax cuts for low-income earners, spending on social programs, and a multibillion euro repayment of bills owed by government to business.

Renzi has also pledged reforms to the Italy's electoral system and has begun the legislative process of eliminating an entire layer of government at the provincial level.