January 28, 2019 / 7:17 PM / 6 months ago

ECB's Visco says austerity should be avoided where not necessary

FILE PHOTO: Bank of Italy Governor Ignazio Visco speaks during a meeting in Rome, Italy, October 31, 2017. REUTERS/Remo Casilli

PISA, Italy (Reuters) - Bank of Italy Governor Ignazio Visco on Monday criticised countries that adopt restrictive fiscal policies when they are not necessary, in an apparent dig at Germany.

Speaking at a book presentation in Pisa, Visco said austerity policies adopted by Italy in 2011 and 2012 were necessary to restore market confidence during a debt crisis, even though they depressed the economy.

However, “austerity is a grave error if it is adopted by countries that have fiscal room for manoeuvre,” Visco added.

Many Italian economists criticise Germany for its large trade and budget surpluses, which they blame for depressing the economies of its euro zone partners.

In other remarks Visco, who sits on the European Central Bank’s governing council, warned that “it is unlikely we will be able to maintain monetary union” in Europe unless it is accompanied by fiscal union.

Reporting by Silvia Ognibene, writing by Gavin Jones; Editing by Crispian Balmer

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