UK and rest of Europe need each other, new bank chief Draghi says

EUROPEAN Central Bank (ECB) chief Mario Draghi has expressed sadness over Britain’s withdrawal from European talks over a new treaty.

“My more general reaction to all this is that it’s sad,” Draghi said in an interview with the Financial Times today. “I think the UK needs Europe and Europe needs the UK. There’s a lot that can be learnt from both sides.”

Draghi praised the UK government’s plans to tackle its huge annual deficit, however, as he urged authorities throughout the continent to embrace austerity. “The UK certainly has shown a capacity to undertake a fiscal correction of an extraordinary size,” he said.

Opponents of fiscal consolidation --who argue that Eurozone countries face a vicious cycle from cutting state spending -- are misguided, Draghi said. “There’s no trade-off between fiscal austerity, and growth and competitiveness,” he argued. “Implementation at national level of the structural reforms needed to enhance growth and jobs creation.”

Only fiscal prudence across the euro area -- implemented by a new compact -- can restore confidence, Draghi added.