Populism has Weakened European Integration, says ECB’s Draghi

ECB President Mario Draghi said in an interview published on Wednesday that the spread of populist movements is threatening European integration and efforts to find joint responses to immigration, security and other shared concerns.

EU citizens’ main worries were “now immigration, counter-terrorist security measures, defence and border protection”, Draghi told Spain’s El Pais newspaper in some of his strongest recent comments on political developments.

“All of these are supranational affairs that require a common response. European integration is the appropriate response, but this has become weaker in recent times, partly because of populist movements,” he added.

Draghi did not name particular parties. But events like the France’s National Front, which wants its own anti-EU referendum and Britain’s UKIP, which helped drive the Brexit debate has shaken up the political landscape by a string of movements.

A heavy burden on the ECB to prop up growth has been enhanced by the risk that has increased that ruling parties shift focus away from needed structural reforms with elections coming up in France, Germany and the Netherlands.

As the European Commission was due to present its biggest plan in more than a decade to revitalise the 96-billion-euro defence industry with a new joint research fund, came his comments holding up integration as an answer to security concerns.

Political uncertainty would increase the longer talks on Britain’s exit from the EU continued, Draghi warned.

“It will be more difficult for investors and other economic agents in the United Kingdom to make decisions. Now, the impact of course is going to be stronger on the UK than it is on the EU and on the euro area, but certainly the UK is a large economy, so it will have an effect here too.”

Repeating the ECB line on maintaining price stability in the monetary union, Draghi declined to comment on the upcoming votes, and a referendum on constitutional changes in Italy.

“What we know is we have an objective which is price stability and we have instruments to achieve that. How can we best contribute to confidence and stability? Through fulfilling that mandate,” he said.

Providing unprecedented stimulus for several years as the bank has cut interest rates to record low levels. It will decide next month whether to extend its 1.74-trillion-euro ($1.85 trillion) asset buys beyond next March to drive growth and inflation.

“And I would say in spite of the many crises of the last six, seven years, we continue to steer the ship towards this mandate, and we foresee that inflation will go back towards our objective of an inflation rate below but close to 2 percent by 2018-2019.,” Draghi said, repeating earlier comments from other board members.

For well over three years, the euro zone’s central bank has missed its inflation target. It will release initial 2019 forecasts on Dec. 8 when it also updates earlier projections.

(Adapted from CBNBC)

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Categories: Economy & Finance, Uncategorized

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