Friday 23 February 2018

Easing austerity ‘would boost Eurozone growth by 1pc next year’

The European Central Bank (ECB) headquarters in Frankfurt
The European Central Bank (ECB) headquarters in Frankfurt
Colm Kelpie

Colm Kelpie

CUTTING back on austerity across the Eurozone would boost growth by 1pc next year, consultants Ernst&Young has forecast.

In its summer Eurozone forecast, the company said the recession across the 17-member bloc will last longer than previously thought.

It said that if the austerity measures currently planned were halved, Eurozone GDP would increase by 1pc next year.

Marie Diron, senior economic adviser to the EY Eurozone Forecast, said that in the short term there is little that can help Eurozone growth.

“The structural reforms that are being implemented particularly across the periphery could take some time to have an impact on GDP,” she said.

“On the positive side the relaxation of fiscal austerity means that measures that would have otherwise been implemented that could have potentially harmed growth have been avoided. But fiscal policy will remain restrictive.”

Ernst& Young said the European Central Bank can do more by easing monetary policy targeted at SMEs.

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