ECB's Draghi open to easing of austerity in eurozone

Mario Draghi, the European Central Bank president, has opened the door for member states to ease back on austerity to reduce unemployment and revive flagging economic growth in the region.

“The long-term cohesion of the euro area depends on each country in the union achieving a sustainably high level of employment,” Mr Draghi said in a speech delivered at the global central bankers meeting in Jackson Hole.

“And given the very high costs if the cohesion of the union is threatened, all countries should have an interest in achieving this.”

Mr Draghi suggested that countries in Europe should be encouraged to increase spending within the existing rules designed to reduce deficits and rein in debt in order to boost economic reform and create more jobs.

His remarks follow a series of worrying figures that show growth in major economies such as Germany and France stalling, while Italy has returned to recession.

“The only conclusion we can safely draw, in my view, is that we need action on both sides of the economy: aggregate demand policies have to be accompanied by national structural policies,” said Mr Draghi.

more