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Merkel says euro zone reforms must continue after ECB move

The European Central Bank’s bond-buying programme must not be used as a justification by euro zone governments to slacken economic reforms, German Chancellor Angela Merkel said on Friday.

The ECB announced on Thursday it would pump hundreds of billions of euros in new money into a sagging euro zone economy despite opposition from Germany’s Bundesbank and widespread misgivings among politicians in the euro zone’s largest economy.

Speaking at a news conference in Florence with Italian Prime Minister Matteo Renzi, Merkel said she would not comment on the ECB’s move out of respect for its independence. But she stressed that only government reforms could revive the euro zone.

“I don’t have the impression that the decision by the European Central Bank could lead to Italy saying ‘we don’t need to reform anymore’. But I say that this must also apply to everybody — and we will watch this in the coming weeks and months,” Merkel said.

“No central bank in the world will be able replace politics; political leaders have to live up to their responsibilities.”
Merkel had encouraging words for Renzi’s reform efforts in Italy, whose economy has not grown for three years, and Renzi pledged the ECB’s decision would prompt him to accelerate reforms rather than slow them.

Speaking before Michelangelo’s masterpiece statue of David in the city where he was mayor before taking power inItaly a year ago, Renzi said he would “put the turbo” on economic reforms which have been widely criticised as not deep enough.

He welcomed developments including a more flexible stance on budget policy from the European Commission, a planned EU-wide investment programme, euro currency depreciation and the ECB’s newly announced quantitative easing plan.

“All these four factors are extremely important for Italy and what has happened obliges us to do the reforms even faster,” he said.
The two leaders spoke as a small group of protesters dressed up as statues and declared themselves “monuments to poverty”. They demonstrated outside the venue against Europe’s economic policies and the influence they said Brussels and Germany had over southern European economies.

Merkel and Renzi declined to comment on Sunday’s Greek election other than to say they were confident the outcome would not lead to serious problems for the currency bloc.

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