EUROPEAN CENTRAL Bank president Mario Draghi has expressed hope that euro zone leaders can pull the currency bloc from crisis, warning that assistance from Frankfurt is “neither eternal nor infinite”.
Speaking in Berlin yesterday, Mr Draghi gave no indication that the ECB would intervene further than it already has in the euro zone crisis and expressed optimism that last week’s EU summit deal meant it would not need to.
“I will never tire of saying that the first response ought to emanate from the country [itself],” said Mr Draghi. “There is no external saviour for a country that doesn’t want to save itself.”
He warned leaders not to lose momentum on reforms and implement swiftly reform proposals, and urged banks to take advantage of new liquidity measures provided by the central bank last week.
His comments came as Hungary said it would not join any European Union pact that hurts the country’s economic competitiveness, particularly if it forces tax harmonisation which Budapest opposes. Prime minister Viktor Orban told a press conference in Budapest that Hungary is still awaiting details of the euro area’s new fiscal compact before the country can decide if it wants to sign up.
Minister for Finance Michael Noonan last night agreed with Mr Draghi’s view, saying that “there is no point in having rules of governance for the future if fiscal adjustments aren’t made in the present”.
Speaking ahead of a speech to the Ireland-US Council in Dublin, Mr Noonan said there were other ways to reduce Ireland’s debt burden beyond a restructuring of the promissory notes being used to push out €31 billion of the cost of Anglo Irish Bank and Irish Nationwide Building Society over time.
“We are not particularly pinning our case on the promissory notes,” he told reporters.
“The position is a methodology to reduce the burden of debt in Ireland and there are a number of ways of doing it – the most striking example is the promissory note but there are other means as well.”
Mr Noonan said he hoped there would not be a need for a referendum to approve the latest EU treaty to solve the euro crisis.
The Government would be involved in technical and legal discussions on the draft treaty that might avoid a referendum but he warned that other countries would also be involved in the talks.
“I can see a manner of a draft emerging where a referendum will not be required but we will only be one out of 26 countries,” he said.
Mr Draghi’s appeal to indebted states to fix their own finances ahead of any external solution came as mixed economic data suggested Germany’s economy is heading for a cool-down in 2012.
Munich’s Ifo institute has revised down its 2012 growth forecast to 0.4 per cent, down from 2.3 per cent it forecast in June and 3.3 per cent it expects for 2011.
“The debt crisis is slowing down the German economy,” said the Ifo. In a statement, it said higher growth could not be ruled out and said it was still “possible to calm down financial markets in a sustainable fashion and avoid a further escalation of the crisis”.
Other economic indicators have given a mixed reading on the economy. The purchasing mangers’ index rose slightly yesterday but remained on the recession side of the 50 point median level.
