OUTSPOKEN European Central Bank policymaker Joerg Asmussen yesterday moved to dampen rising expectations that growth could 'replace' austerity, telling a Berlin audience that any growth package must not mean a softening of Europe's fiscal pact on budget discipline.
Presenting a vision for Europe over the next 10 years, Mr Asmussen said the right crisis response was "not less, but more Europe" and that fiscal union was ultimately the right path.
There is a growing push in the eurozone, led by French President Hollande, to do more to stimulate growth and not just focus on reducing deficits -- German Chancellor Angela Merkel's mantra.
Mr Asmussen said the debate on growth versus austerity was the "wrong debate" to hold.
"We need both," he said in a speech in Berlin, though he stressed the need for fiscal consolidation and reforms.
"The fiscal compact can be complemented by growth-enhancing measures. This makes sense as a supplement, but the fiscal compact cannot be renegotiated or softened," he said.
The ECB has helped fight the debt crisis by cutting interest rates to a record low of 1pc, flooding financial markets with more than €1trn in three-year loans and buying struggling eurozone countries' bonds in the secondary market.
Mr Asmussen stressed that the ECB's non-standard measures were of a temporary nature and could be withdrawn any time if inflation risks emerged.
ECB vice-president Vitor Constancio told an audience in Japan that it was still too early to end the ECB's extraordinary crisis support measures.
"The exit will come some day, but certainly not now," Mr Constancio said. "We would need to reduce liquidity to go back to normal times."
Mr Asmussen laid out what a growth pact could look like and how a more closely integrated currency union could work.
Mr Asmussen suggested adding goods and labour market reforms to the existing fiscal compact. Such reforms could, for example, boost the mobility of the labour force and include offering language courses and a European network for job placement, which Mr Asmussen said could be financed via the European Investment Bank.