Ireland needs more reform - Trichet

EUROPEAN CENTRAL Bank (ECB) president Jean-Claude Trichet has said further Government action is required to recalibrate the economy and reinforce competitiveness.

While praising the Government’s efforts to stabilise the economy, he singled out Ireland alongside Greece as countries in which more structural reforms were required to foster employment and growth.

Mr Trichet was speaking at the ECB headquarters after the monthly meeting of the ECB governing council at which the euro zone’s policy makers unanimously decided to leave the base rate unchanged at 1 per cent.

While noting that new data confirmed the euro area continued to expand towards the end of 2009, the bank said some of the factors supporting growth were of a temporary nature. “The governing council expects the euro-area economy to grow at a moderate pace in 2010, recognising that the recovery process is likely to be uneven.”

Mr Trichet said there were countries in the euro zone that had to do a lot to improve their growth potential. “A number of countries – Greece and some others, Ireland for instance – have certainly to engage in a strategy that would reinforce their competitiveness and that is of course a strategy which is absolutely decisive in order to get growth and jobs.”

He said he did not want to engage in too much detail when asked what specific actions were required from the Irish authorities. However, he said “what I have seen coming from Ireland has been quite impressive in terms of adjusting to new circumstances without losing time, and not hesitating in taking this kind of bold and courageous decision that I have mentioned in order to put the economy back on its feet”.

Mr Trichet rejected suggestions that Greece may have to leave the single currency due to its fiscal problems.

He was speaking as Greek prime minister George Papandreou pledged in a televised address to do “whatever it takes” to fix the country’s ailing public finances.

His government will cut spending and raise revenue by some €10 billion under a three-year programme.

While saying the ECB would examine the proposals with interest, Mr Trichet ruled out any bailout for Athens by saying no member of the single currency had the right to expect exceptional treatment from the ECB.

“The problem of help is not a real problem . . . Belonging to the euro area you are helped because you have an easy financing of your current account deficit; you share a currency which is credible so you have a level of financing which comes to a credible currency.”