IRELAND’s economy has made progress – but Europe needs to act now avoid another “lost decade”.
That is according to Mark Carney, the head of Bank of England, who made the comments at an event in Dublin’s Iveagh House last night.
Mr Carney was in Ireland to honour the memory of the late Jim Flaherty, former Minister for Finance in Canada.
Mr Carney commended Ireland’s economic turnaround in recent months.
“Many of you worked closely with Jim as Ireland negotiated agreements with the Troika and devised policies to rebuild its battered economy. I am confident he would be proud of the progress Ireland has made,” he said.
Despite his comments on Ireland’s growth, Mr Carney said he is apprehensive about the discrepancy within the European Union.
The Bank of England governor expressed concern about Eurozone countries sharing a currency without also sharing decisions on taxes – and highlighted the fact that while some European countries were recovering well, others are “sinking deeper”.
The problem in Europe, he highlighted, is that countries need to increase risk sharing.
“Fiscal stabilisers also play an important role in sharing risks across individuals, sectors and regions, thereby reinforcing the resilience of the UK’s currency union,” he said, going on to say that Europe needed to follow suit in order to fully emerge from the crisis situation.
In order to follow Britain’s example, there needs to be increased risk sharing to avoid this idea of a “lost decade”. At 11.5 per cent, the European rate of unemployment is almost twice that of Britain.
Mr Carney commended Britain for sharing the risks of the economic downturn across England, Scotland and Wales – and called for a similar strategy to pull Europe out of the black.
“Europe needs a comprehensive, coherent plan to anchor expectations, build confidence and escape its debt trap,” he concluded.
