Europe News

Italy's Padoan would welcome lower euro

Reporting by Steve Sedgwick, writing by Antonia Matthews

Italy's minister of economy and finance said on Sunday a lower euro would be good for European competitiveness.

Pier Carlo Padoan's comments, made in an interview with CNBC at the Ambrosetti Forum in Italy, echo those made by French policymakers. Prime Minister Manuel Valls has called on the European Central Bank to take more action weaken the euro.

"A lower euro by definition helps competitiveness and feeds in a little more inflation which I'm concerned about because it's much too low," Padoan said.

Italian Economy and Finance Minister Pier Carlo Padoan in Rome, March 12, 2014.
Andreas Solaro | AFP | Getty Images

The European Central Bank (ECB) surprised investors and markets on Thursday by cutting interest rates to record lows and announcing a bond-buying program in response to growth-sapping disinflation.

The euro fell by over 1 percent against the dollar to under $1.30 after the rate announcement, before paring some losses.

A lower euro would be "appropriate", he said. "It would be good for the euro zone. It would be good for the global economy because we'll be part of the global rebalancing."

Padoan said he strongly believe that -- given disappointing real growth and disappointing inflation -- there is a real risk that Europe as a region enters into stagnation territory.

"This is a risk. This is not a certainty but avoiding that risk is fully dependent on what we do on the policy side, and we enact a decisive growth policy which means structural reforms, investment, more internal market," he said.

'Don't tell us what to do'

Turning to Italy, which fell back into recession in the second quarter, Padoan said the country knew it needed to push through fiscal reforms.

"We don't need anybody to tell us what we need to do," he said.

Enacting those reforms would take some time, he said, andgovernment was aiming to make permanent spending cuts to achieve permanent savings.

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