Europe could face a decade of stagnation unless it makes big reforms and should heed the lessons of Japan, Bank of Canada Governor Mark Carney said on Tuesday as he highlighted Japan’s bold moves to bolster growth.
In his final speech as Canadian central bank chief before taking over the Bank of England on July 1, Carney said Europe’s recessionary economy is being held back by fiscal austerity, low confidence and tight credit conditions.
“Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens,” Carney said in prepared text of a speech he was delivering in Montreal.
“Europe can draw lessons from Japan on the dangers of half measures,” he said, adding that the success or failure Japan’s massive monetary stimulus – which he termed a “bold policy experiment” – will affect the outlook in coming years.