A European Central Bank board member has warned that former communist nations on the European Union’s eastern periphery are struggling to catch up to the west.
“If there is no credible prospect of lower-income countries catching up soon, there is a risk that people living in those countries begin questioning the very benefits of membership of the EU or the currency union,” Benoit Coeure said in Vienna.
“Such doubts would be particularly worrisome in the unstable world we are currently living in,” he added.
As reported by the Reuters news agency, trust in the EU is falling in some east European states, such as Hungary and Bulgaria, but EU surveys still show that the vast majority of people in the EU’s eastern nations still say their country benefits from being a member.
Coeure said the key issues are the big drop in productivity growth and the lack of capital.
“These economies are now faced with a notable capital shortfall,” Coeure added. “And, worse, investment rates have fallen further since the crisis.”
“Europe can and should help, in three main ways,” Coeure said,
“First, by providing the market that makes the development of new industries profitable. Second, by channelling funds to sectors and countries where capital can be used most productively. And, third, by providing direct financial assistance to foster convergence and support national reform efforts.”