We will then know what the capital shortfalls are and whether they can be covered. Moreover, the state of the banking sector is a serious problem for the country, but not the only one. Slovenia has inefficient state enterprises, attempts to introduce pension reform have failed twice and it is running a larger budget deficit than EU regulations allow. Many people are also concerned about the heavyweights France and Italy. Some observers fear that both countries are completely incapable of introducing reforms. How frustrated are you and your ECB colleagues that the large countries are not making better use of the time that the ECB, too, is “buying” for them to introduce reforms. Let me say one thing first: we all have a strong interest in an economically strong France. The entire construction of the euro area can only function with a strong France. The latest pension reforms are a step in the right direction but do not go far enough. I also see problems regarding the intended funding through higher taxes and contributions, rather than through specific spending cuts. Besides, the plans also contradict the EU Commission’s country-specific recommendations. The bottom line is that France will need to do more to enhance its competitiveness. The government will need to speed up the pace of reforms. And Italy? Much was achieved through fiscal policy efforts under the former prime minister Mario Monti. It is now important to ensure that these successful achievements are not eroded.
I am optimistic that Europe will come out of the crisis stronger and more robust. But that won’t be true of the euro area’s growth potential, will it? Many economists now think that will be much lower. We don’t traditionally publish our estimate of that. However, we must work on the assumption that the potential growth rate has slowed down – owing to the lower use of labour and, especially, the fall off in investment. The long-term development is still unclear. If the crisis is used to push through the necessary reforms, potential growth may accelerate. But we also need to consider the rapid ageing of the population, which will depress potential growth. Let’s now look at the current situation. The ECB is more sceptical than many economists – many would even say “pessimistic” – when it comes to the economic outlook. What is that assessment based on? I wouldn’t say that we are pessimistic. We are currently seeing the confirmation of what we have been expecting since December: the euro area is recovering very slowly in the course of the year, and that improvement will continue next year. However, there is no reason for our growth forecasts to go shooting up, and that is why we remain cautious. And that is why the ECB is continuing to try to use its forward guidance to shield the euro area economy from rising market interest rates in the event that the ultra-loose monetary policy in the United States comes to an end?