Eurozone set-up unsustainable, says Draghi
Published: 31st May 2012 11:33:08
European Central Bank (ECB) president Mario Draghi says that eurozone leaders must decide what they want the bloc to look like in the future, because the current set-up is "unsustainable".
He said that the ECB could not "fill the vacuum" left by governments on creating growth or structural reforms.
EU economics commissioner Olli Rehn said more austerity was needed if the eurozone was to avoid disintegration.
New figures showed eurozone inflation slowed more than expected this month.
Inflation in the 17 countries that use the euro eased to 2.4% in May from 2.6% in April.
The figure is still above the ECB's target to keep inflation below 2%, but the lower-than-expected number could fuel calls for an interest rate cut next week.
Speaking to the European Parliament, Mr Draghi said: "Can the ECB fill the vacuum of lack of action by national governments on fiscal growth? The answer is no. Can the ECB fill the vacuum of the lack of action by national governments on the structural problem. The answer is no.
"The next step... is to clarify what is the vision a certain number of years from now. The sooner this is specified, the better it is."
Mr Rehn talked down the idea of European states issuing joint bonds, saying that austerity and closer co-operation were needed.
"We need a genuine stability culture and a much upgraded common capacity to contain common contagion," he told a conference.
"This is the case, at least if we want to avoid a disintegration of the eurozone and instead make the euro succeed."
Worries over the eurozone debt crisis - and in particular Spain's banking sector - have been hitting markets all week.
However, the markets were enjoying a respite on Thursday. The euro - which had fallen to near two-year lows against the dollar at $1.2358 - recovered slightly to $1.2410.
European stock markets were mostly positive, with London's FTSE 100 share index up 0.8%, and the Frankfurt and Paris indexes registering similar gains.
The pressure on bond yields also eased slightly, with Spain's 10-year bond yield - the rate of return demanded by investors - falling back to 6.61%, having reached 6.79% on Wednesday.
In other figures released on Thursday, Germany's unemployment rate fell below 7% as Europe's biggest economy continued to perform strongly.
The jobless rate dropped to 6.7% in May, from 7% in April, as the number of people unemployed fell by 108,000 to 2.86 million.
However, there was more bad news from Greece as figures showed that Greek retail sales volumes fell by 16.2% in March compared with a year earlier. This followed February's decline of 12.9%.
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Harvard CitationBBC News, 2012. Eurozone set-up unsustainable, says Draghi [Online] (Updated 31st May 2012)
Available at: http://www.ukwirednews.com/news/1432014/Eurozone-set-up-unsustainable-says-Draghi [Accessed 24th Apr 2014]
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With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com