Pier Carlo Padoan: Promoting Growth, Employment and Solidarity in Europe
On 21 October 2016, Pier Carlo Padoan, Italian Minister of Finance, held a speech on “Promoting Growth, Employment and Solidarity in Europe in Times of Political and Policy Uncertainty” at Goethe University organized by the Research Center SAFE, the Center for Financial Studies and Deutsche Bundesbank. Padoan was introduced by Brigitte Haar, Vice President of Goethe University Frankfurt, and Jens Weidmann, President of Deutsche Bundesbank.
Padoan started his lecture with the assessment that, since the financial crisis of 2007-08, Europe is facing a time of weak economic prospects, rising inequality, and increased downside risk with regard to economic developments. The recovery after the recession has been below expectations and the current economic environment of low interest rates and weak demand has been dubbed the “new normal” by economists.
The Minister addressed the issue of political uncertainty as a factor that negatively affects economic growth in Europe. In times of political uncertainty, households increase precautionary savings and reduce spending, thus lowering demand, while firms hold back investments, further lowering economic growth. He emphasized the need for coordinated policy action, encompassing monetary, fiscal and structural policies, to dissipate political uncertainty.
Regarding specific policies, Padoan called for increased public investment in countries exhibiting the necessary fiscal space, potential joint debt issuance in the eurozone and structural reforms in deficit countries. Padoan elaborated that all policy measures should focus on inclusion and economic inequality as important dimensions of the economic discourse.