Euro area inflation has been very low, and the European Central Bank has made a major effort to push it back up again, with policies including negative interest rates and quantitative easing. But Italy has a large debt burden. It has problems of political and fiscal policy uncertainty. Over the past five years, Italy has had average growth of less than 1%.
The euro area-wide employment rate stood last year at 63%, while, for comparison, it stood at 71% in the U.S. Thus, if the 2010 Lisbon target is to be met, employment rates need to increase much more rapidly. Boosting labour productivity growth is another central component of the efforts to enhance Europe’s growth potential.