Mark Carney: belief

Transcript context

…Now, as you know, Mario Draghi, who was a central banker — he’s now running Italy for at least some while. He’s put forward a plan to have a very aggressive fiscal policy, spending about 200 billion dollars, euros, whatever. From my great distance, it seems to me Italy’s problem is not mainly one of demand. It’s been running on for 25 years. It’s a real problem often resulting from local or even municipal rigidities. If that’s the case, why would spending 200 billion, when debt levels are quite high already, why would that help? What do you think? First thing, obviously, I can’t speak for Prime Minister Draghi [laughs], but I get used to saying that. I would think that he would agree with much of your premise, and I’ll make the following observations. First thing, Italy, the level of GDP is the same as it was in 1999. It’s an absolutely astonishing figure. We’ve had a COVID shock and everything, but there was just so — and whereas Germany is 25, 27 percent above today, even before they get the COVID recovery. That is fundamentally your point. It’s a question of supply capacity, ultimately, productivity given weak population growth, where productivity has not gone in Italy. Part of that is absolutely the regulatory aspect. One famous example, a very important example is around bankruptcy laws in Italy. It just takes a very long time to unwind a business and prosecute bankruptcy. Then, of course, you don’t want to lend if it takes a long time to do that or start a business if it does. There’s a series of those types of reforms that are necessary. That said, most of that 200 billion is around infrastructure, around measures to improve the supply side of the economy. I think the prime minister would absolutely agree we need these other reforms on the regulatory side and the way business operates in Italy, but at the same time, bridges need to be built. There’s a grid that needs to be greened. There were a series of opportunities — for example, we talked earlier about climate change, and Italy is one of the jurisdictions that has huge opportunities in the hydrogen economy, actually. And there’s ways for them to kick-start that, which would provide an export engine. To return to your new book, Value(s), which was the hardest part of it to write?…

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