Delivering her first major speech as head of the European Central Bank, Christine Lagarde has urged Governments to invest more in a “new European policy mix,” taking the focus away from monetary policy.
She said: “it is clear that monetary policy could achieve its goal faster and with fewer side effects if other policies were supporting growth alongside it”.
Ms Lagarde’s comments come off the back of growing concern among EU member states at low interest rates, despite stagnating growth.
In this regard she said that investments needs are certainly country-specific, “there is today a cross-cutting case for investment in a common future that is more productive, more digital and greener”.
“Public investment in the euro area remains some way below its pre-crisis levels. The share of productive expenditure in total primary expenditure – which in addition to infrastructure includes R&D and education – has also dropped in nearly all euro area economies since the crisis. And new investment needs are emerging.
Ms Lagarde remarked that uncertainties have “proven to be more persistent than expected” impacting eurozone growth, and that the increasing trade seen during decades of globalisation was “no longer an absolute certainty.”