Spain Reforms Will Show Results in 6 Months: ECB’s Nowotny
Economic fundamentals in Europe are improving substantially and Spain will not need additional aid as the results of its reforms will become apparent in six months’ time, ECB Governing Council Member Ewald Nowotny told CNBC’s “Squawk Box” on Monday.
“For the time being I don’t see this,” he said, asked whether Spain would need more assistance. “All structural reforms need some time,” he said.
Nowotny underlined that Spain had undertaken very substantial structural changes in the labor market and its fiscal system.
“I will say that in half a year time, at the end of this year, the results will show,” Nowotny said.
The ECB board member, who is also governor of Austria’s central bank, said that he was not in favor of a quick succession of monetary policy steps, and said now was the time to see how the ECB’s recent liquidity operations affect the economy.
“I think the fundamentals in Europe are improving substantially,” he said. “The budget deficits are going down.”
Asked whether additional long-term repurchase operations were on the horizon, Nowotny said: “For the time being our strategy is a steady hand strategy – let’s see how it works.”
“It is the policy of the ECB never to pre-commit”, he said, "but as we have shown in the past, we can act in a very forceful way”.
Despite weak German PMI numbers on Monday which heightened fears over the euro zone's potential to recover, he said he was not concerned. Structural changes had been carried out, he said, but this was a critical period during which the outcome of reforms would be closely watched.