Europe is at risk of suffering lasting economic damage from weak productivity and low growth, the European Central Bank's president warns, underscoring his argument that monetary policy alone cannot end the bloc's economic malady. David Pollard reports
It's the issue that's inflamed Europe: reform. With it comes pain for cash-strapped workers. Without it, warns Mario Draghi, Europe faces lasting damage. SOUNDBITE (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "There are many understandable political reasons to delay structural reforms, but there are few, very few good economic ones. And the cost of delay is simply too high." And he is right - at least according to economists who see him pointing a finger at governments. For a lack of action on key areas - like productivity. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "That requires investment, for instance to try and instigate greater productivity and that is really important because productivity goes hand in hand with an improvement in living standards and an improvement in wealth, so he is quite correct." But the problem for governments of course - is the people who elect them. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "What we see is a lot of disgruntled voters, people in Europe moving to the far left and the far right and that is wearing away support for the governments we have, and structural reform can often be very unpopular." As monetary policy can be - at least with banks. Negative interest rates costing them revenues, they say - Commerzbank now reportedly looking at hoarding its cash in its own vaults rather than pay the ECB to keep it. That's unlikely to deter Draghi: just this month, the ECB's corporate bond buying scheme came on stream. And under its TLTRO 2 lending programme, it'll effectively pay banks to borrow money - if they lend out enough of it. If they don't, that too raising questions over whether monetary policy really is working.