ITALY - Lorenzo Bini Smaghi, Italy’s executive board member at the European Central Bank, has said Italian pension reforms have not been recognised outside the country.
“Italy has undertaken important reforms in recent years which have often not been properly recognised abroad, for example, reforms of its pension system and labour market,” Bini Smaghi said in an interview with Italian daily La Repubblica and posted on the ECB’s website.
Bini Smaghi, who joined the ECB this year from his post as director general for international financial relations at the Italian Ministry of the Economy and Finance, also said that savings are unexpectedly rising in Europe – partly due to demographic factors.
He told the paper: “The reason for this seems to be a lack of household and business confidence, which mainly stems from the process of population ageing, uncertainty regarding the state of public finances, and the employment situation.”
He said: “In order to stimulate growth, household and business confidence must be restored by radically tackling the structural problems of our economies. I believe that the people of Europe are willing to face severe restructuring measures as long as they can see the end of it.
“Unfortunately, past experience has shown that as soon as one reform is launched, another has to follow shortly after, because the first only partially resolves the problem. This leaves people disheartened.”
Meanwhile, the European Commission has moved on Italy’s excessive budget deficit, giving it until the end of 2007 to correct the situation.
“With a debt higher than 100%, Italy needs to correct its deficit rapidly and durably,” said Joaquín Almunia, Commissioner for economic and monetary affairs.
“This requires a structural adjustment of the government finances as well as addressing the competitiveness problems of the Italian economy which will push the country back on the growth path.”