US President Barack Obama on Friday praised the “intelligent and necessary” reforms being carried out by Italy and Spain but warned they would take time to bear fruit.
While Obama acknowledged the need for reform, he warned of putting too much emphasis on austerity and the expense of growth.
“Some countries have an unemployment rate of 10 or 15 percent. If that rate goes up to 20 or 25 percent (the case of Spain) that makes it harder to pay off your debts. The markets will respond to that by making it more expensive for those countries to borrow,” Obama said at a White House press conference.
“If they are just cutting and cutting and cutting and their unemployment rate is going up and up and up and people are cutting back on spending, that delays the economic reforms,” he added.
Obama stressed the need for a strong Europe in order to maintain healthy demand for US exports.