By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Fabio Panetta on Wednesday said that Europe's reliance on external demand should be rebalanced and called again for a joint fiscal policy.  

In a speech at the 2024 Rimini Meeting in Italy, the text of which was posted to the website of the Banca d’Italia, which he heads, Panetta said, ‘The strengthening of the European economy must take place on multiple dimensions: by rebalancing its dependence on foreign demand and enhancing the single market; making it more competitive; placing it at the forefront in the technological and energy fields; making it able to provide for its own external security.’ 

The gap between European and American productivity had become wider in recent years mainly due to the difficulty that European companies experienced in embracing new technologies in the production process, he said.  

Deep reforms and investment would be necessary to reduce the gap and to strengthen the European economy, he said.  

‘[I]t is essential to relaunch growth, not only to guarantee well-being of citizens, but also to continue to count in the world’, he said.  

In this context, fiscal policy played a fundamental role in balancing the single monetary policy and the fragmented national budget policies in the euro area, he said.  

‘A common fiscal policy would correct this imbalance and would strengthen cohesion between member countries, facilitating implementation of large-scale strategic investments’, he said.