(Bloomberg) -- The election of Donald Trump is a wakeup call for Europe to implement long-delayed reforms, said the central bank chiefs of its top two economies, adding that more common debt isn’t needed for now.
“On an economic level, our two countries and Europe are now at a crossroads,” Bundesbank President Joachim Nagel and Bank of France Governor Francois Villeroy de Galhau said in a joint op-ed published in Frankfurter Allgemeine Zeitung.
“Either Europe continues down the path of low growth, low productivity and low innovation, the path of the past three decades — and especially the last few years, which the Draghi report aptly describes as a ‘slow but painful decline.’ Or we join forces to pursue an ambitious, even disruptive path.”
Former European Central Bank chief Mario Draghi published a report in September that called for a number of measures — including investments of as much as €800 billion ($838 billion) extra a year — to make the European Union more competitive with China and the US. Critics focused on his demand that the bloc commit to the regular issuance of common bonds, a matter that is a red flag for German officials.
“On financing, we both support using the European budget for tasks that should be dealt with at European level,” Nagel and Villeroy said. “However, this does not currently require new debt at EU level. Instead, we should prioritize the numerous proposals contained in the report for more structural reforms that do not entail costs.”
Nagel and Villeroy highlighted three priorities to improve Europe’s economic performance: deepening the internal market, creating a savings and investment union and cutting red tape to encourage innovation.
The central bank chiefs of German and France are set to speak on a joint panel at a banking conference in Frankfurt on Friday.
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