ECB's Draghi urges spending cuts over tax hikes

The best way for governments to tighten up their budgets is through spending cuts rather than tax increases, European Central Bank President Mario Draghi said on Thursday.

"The ideal fiscal consolidation ... must be focused on spending cuts and not tax hikes," Draghi said in a speech at Bocconi University in Milan.

"It is essential that (this consolidation effort) is perceived as credible, irreversible and structural to have impact on sovereign debt spreads," he added.

Earlier on Thursday, ECB Executive Board member Joerg Asmussen said all euro zone countries, including Germany and France, must reform their economies and work harder if they want to keep up their living standards. (Reporting by Francesca Landini and Lisa Jucca, writing by Paul Carrel)