THE RISE OF populist parties across Europe should act as a wake-up call for governments to finally get their economies in order, a top European Central Bank official said today.
“The rise of populism should be a wake-up call,” the ECB’s chief economist Peter Praet told the financial daily Boersen-Zeitung in a wide-ranging interview.
Difficult decisions
The governments have to give priority to difficult political decisions and follow through with the much-needed reforms.
Praet’s comments came as Greece is preparing for snap elections with a far-left anti-austerity party Syriza leading opinion polls.
Syriza pledges to reverse Athens’ reform commitments and even eventually take Greece out of the eurozone.
“Populist parties in some countries promise quick solutions — but they offer only recipes for disaster,” Praet warned.
“Nobody should be under the illusion that you only need to return to the old system and everything will be better,” he argued.
Countries had signed up to the single currency because the old system of constant devaluation was not working.
“What is needed now is to make the much needed structural adjustments. A devaluation policy doesn’t solve structural problems,” Praet said.
There were institutional flaws in Europe which had to be resolved, the economist argued.
“We have a monetary union with a very strong central bank — but the other institutions have been too weak,” he said.
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