Italy’s finance minister says Europe at fork in the road

Italy’s finance minister says Europe at fork in the road

PanARMENIAN.Net - Italy’s finance minister Pier Carlo Padoan has warned that time is running out for Europe’s tottering economies to avoid stagnation, the Guardian reports.

Speaking on the eve of a national strike in Italy and after figures showed the country’s industrial production fell yet again in October, he said: “There isn’t much time. Europe is at a fork in the road. One path leads to stagnation; the other to growth that we sorely need.”

Padoan attacked the European Investment Bank (EIB) for worrying more about its credit rating than about promoting growth and revealed he had been discussing with Brussels new rules to encourage government spending that underpinned structural reform.

Italy saw this week violent clashes as millions of workers joined the nationwide stoppage in protest at the government’s employment law reforms.

Padoan gave a guarded welcome to the plan sponsored by European commission president Jean-Claude Juncker to inject extra investment cash into the European economy from June.

But he warned that “June is a long way off for the time-scale of the economy”, saying something had to be done in the meantime. One possibility was to mobilize the EIB.

He added: “The problem with the EIB, as you know, is that it has a very prudent attitude to investment because, to protect its triple A [rating], it does not want to take on, let’s call it, excessive risk.

“In my opinion – and not just mine – the ‘Bank of Europe’, as they love to call themselves, could be a little bit more aggressive; a bit more proactive.”

Under the Juncker plan, which has been met with widespread scepticism, the commission and the EIB would provide guarantees of €21bn to raise €65bn in loans for selected projects, in turn attracting private capital to bring the total to €315bn.

But Padoan warned that not all investment projects were good. He said: “I would like a European mechanism that takes on the task of evaluating European investment projects. It could be the EIB.”

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