Governments should be looking to cut taxes as a fragile euro zone recovery begins to take hold, Mario Draghi, the president of the European Central Bank told an audience at the World Economic Forum.
In a wide-ranging speech, Draghi detailed what European countries should now be looking to achieve as the continent emerges from recession.
"Overall the outlook for structural reforms are by and large positive," he said. "There is now a very diffused awareness of a need to do these reforms. It shows in polls, it shows in votes, it shows also unfortunately in a very high level of unemployment."
(Read More: Barroso insists: Europe's crisis is not over yet)
Unemployment in the 18-country euro zone, however, remains stubbornly high at 12.1 percent. While youth unemployment increased in November 2013, according to data released earlier this month, with 3.575 million under-25s without a job in the euro zone.
Draghi called on the euro zone's governments to step up the pace of reforms to help reduce the level of youth unemployment:"There must be something in the labor legislation in countries where youth unemployment is high that discriminates against youth."
(Read More: ECB's Draghi: Nothing new on negative deposit rates)
He urged governments to reduce their expenditure while at the same time reducing taxes. He said that they should not unravel the efforts that you've done in the past three, four, five years.
He added that some of the peripheral countries had made some of the biggest adjustments and significant structural reform efforts.
(Read More: ECB's Draghi cautions against undue optimism)
"Even Greece has actually achieved very very meaningful progress...I don't think the work is finished, it should continue.," he said.
He added that some sore core countries have yet to make their fiscal adjustments, in perhaps a direct nod to France who are in the process of confirming their recent reform package.
—By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81
