Italy's Prime Minister Mario Monti backed a call on Thursday to aim the EU's stalling economy towards growth, saying that concentrating on budget savings alone could leave the continent in a prolonged slump.
Responding to the European Central Bank's message that it was up to leaders to pull Europe out of its devastating debt crisis, Monti said countries needed "new policy skills" as well as structural reforms and government spending cuts.
"I believe that is the factor which is in shortest supply at the moment in spite of so many good individual and collective efforts," Monti told business leaders in Brussels.
"If there is no demand, growth will not materialize. All the reforms we are putting in place now are deflationary," he added.
ECB President Mario Draghi earlier called for a "growth compact", which was also welcomed by French presidential front-runner Francois Hollande and other leaders.
The European Union, which generates about a fifth of global output, has struggled to strike a balance between austerity and growth as it seeks to overcome a decade of runaway spending while grappling with recession.
Britain and Belgium are suffering their second recession in just three years, while Greece is predicted to remain in a depression that will shrink output by about 17 percent over four years.
But with investors driving up borrowing costs for indebted Spain and Italy, countries have signed up to a German-driven fiscal compact to enforce debt and deficit-cutting rules more strictly to try to win back that lost confidence.
"I am pleading for a European pact on growth," Belgian Prime Minister Elio Di Rupo told the conference before Monti's address. "We have to mobilize all our intelligence to put Europe back on track to prosperity."
European Council President Herman Van Rompuy, who chairs EU leaders' summits, said growth was now "the highest priority" and that he may convene a meeting of leaders ahead of the EU summit of heads of state and government on June 28-29.
Monti was careful not to directly criticize the German-led drive to rein in Europe's debt, however. He said revising the fiscal compact, as Hollande has vowed to do if elected French president, was not on the European agenda.
"We reject the old style of intentional growth through expansionary deficits," he said.
"TELL THE TRUTH"
With one in 10 European workers out of a job, politicians sense that recently implemented reforms, including to labor laws, in mainly southern European economies may be moving too slowly.
"Structural reforms ... will make a difference over time," Van Rompuy said.
"We must tell the truth. There are no magic formulas, reforms take time and so does their impact on jobs and growth."
None of the leaders at Thursday's conference offered any immediate, concrete steps that might quickly revive the euro zone's economy at a time when demand from China and the United States looks like its best chance of pulling out of recession.
Di Rupo talked of "revolutionizing mentalities" and pushing for more "entrepreneurial risk-taking" in Europe, while Van Rompuy said countries should increase the European Investment Bank's capital so it can lend more to businesses.
But previous attempts to do that have failed in the face of opposition from countries such as Britain.
Monti joined his British and Dutch counterparts in February in a letter to top EU officials that pressed for a shift in policy towards growth, but that too lacked clear solutions.
"Policy margins are limited," Van Rompuy said.
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