European Central Bank Governing Council member Ignazio Visco called on Saturday for European Union countries to create a common budget for defence, security, research and infrastructure. Visco, the governor of the Bank of Italy, said the pooling of budgets in these key areas should be a step towards the eventual creation of what he described as "political union" in the region, without elaborating on what such a union would entail.
"Much could be gained today if EU member states pooled together our public budgets in broad areas from infrastructure investments to research, security and defence," Visco told students at Bologna University. "European monetary, banking, fiscal and budgetary union aims, or should aim, towards political union," Visco said in a largely academic speech about technological innovation, human capital and employment prospects.
In a question and answer session with students, Visco also said many of the euro zone's economic problems were still connected to investors' concerns that the euro zone could break up. "How do we eliminate these fears? By making people understand that this union is not reversible," he said. Visco has frequently urged faster steps towards political integration in Europe and has criticised Italy's chronic failure to invest in education, culture and the environment.
This failure can not be justified by budget constraints alone, he said, adding that "there is also a serious defect in our capacity to understand their fundamental importance as an investment in the future, even the near future". Visco rejected as unrealistic a goal set out by the European Commission for the EU to increase the role of manufacturing in its economy to 20 percent of total output from 16 percent at present. He said it was highly probable that the role of manufacturing would continue to contract in favour of services and that there was "a risk of overestimating its potential in terms of job creation".
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