FRANKFURT (AFP) – A raft of grim eurozone data this week alarmed financial markets and placed both Germany’s doctrine of budgetary rigour and European Central Bank’s monetary policy in the hot seat.
A seemingly never-ending stream of gloomy numbers sent the stock markets into a tailspin and exposed the fault lines in economic thinking across the 18-country euro area.
ECB chief Mario Draghi insisted that growth depends on reforms by governments, but also sent a strong signal that the central bank could ramp up stimulus for the economy.
“We are ready to alter the size and/or the composition of our unconventional interventions, and therefore of our balance sheet, as required,” he said in a speech in Washington.
Also, Germany’s leading think-tanks called for a boost in spending to revive growth, providing grist for a campaign against EU budgetary rigour by French President Francois Holland.
On the sidelines of the World Bank and International Monetary Fund meetings in Washington, Draghi and German Finance Minister Wolfgang Schaeuble differed over how to pull the eurozone out of its economic quagmire.
The waves of gloomy data last week were relentless.
Germany, in particular, on which much of the European economy depends, was hit by unexpectedly sharp drops in factory orders and industrial output and a slump in exports.