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Eurozone faces 'another lost decade': Bank of England governor
[DUBLIN] Bank of England governor Mark Carney has warned that the eurozone faces "another lost decade", urging more solidarity in what is being seen as a thinly-veiled reprimand to Germany after elections in Greece.
Mr Carney started off his speech in Dublin late on Wednesday saying he intended "to reflect on how the euro area could act to avoid another lost decade".
Mr Carney urged the bloc to "share fiscal sovereignty" and accused eurozone leaders of "timidity", in comments that come after the electoral victory of the anti-austerity Syriza coalition in Greece.
New prime minister Alexis Tsipras has threatened to break commitments made by preceding governments and wants to renegotiate Greece's 240 billion euro (US$269 billion) EU-IMF bailout and scrap austerity measures.
Germany, as Europe's biggest economy and effective paymaster, has lent it the most.
Without referring to Greece explicitly, Carney said that if the eurozone were a country "fiscal policy would be substantially more supportive".
"Persistent economic weakness damages the extent to which economies can recover. Skills and capital atrophy. Workers become discouraged and leave the labour force. Prospects decline and the noose tightens," he said.
"As difficult as it has been, some countries, including the US and the UK, are now escaping this trap. Others in the euro area are sinking deeper."
Mr Carney also praised the European Central Bank, which earlier this month unveiled a 1.1-trillion-euro quantitative easing programme, saying the move showed "boldness".
But he added: "Europe's leaders do not currently foresee fiscal union as part of monetary union. Such timidity has costs."
Britain is not among the 19 nations that use the euro.