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Draghi upbeat about euro

September 25, 2012

ECB President Mario Draghi has said that he sees grounds for optimism about the future development of the eurozone. He's put a positive spin on economic reforms already undertaken in some nations.

https://p.dw.com/p/16DwG
President of the European Central Bank, ECB, Mario Draghi, center, is guided by the president of the Umbrella Association of German Industry, BDI, Hans-Peter Keitel
Image: AP

Draghi told a meeting of the Federation of Germany Industry (BDI) in Berlin on Tuesday that reforms in the debt-racked eurozone are beginning to yield positive results.

"We have a number of reasons to be positive about where the eurozone is heading," Draghi said. He defended the European Central Bank's controversial bond-buying plan, arguing that it is underpinning improved sentiment in parts of the bloc.

"The ECB's action can only be a bridge to the future," Draghi warned, however. "The project must be completed through decisive actions by governments both individually and collectively."

For her part, German Chancellor Angela Merkel said earlier at the same meeting that financial markets around the globe remain fairly unimpressed by the efforts of highly indebted European nations to get their budgets in order through rigid fiscal discipline.

"There's a lack of confidence in financial markets that some eurozone countries can pay back their debts in the long run," Merkel said.

The German leader added that it requires a lot of stamina to regain lost confidence and cited the bloc's fiscal compact and the eventual establishment of cross-border banking supervision as key steps in efforts to get to grips with the protracted crisis.

No tax hikes for Germans

Merkel told a packed audience of policy and business leaders that Germany is relatively well positioned to survive the crisis with only a few bruises. She said that she expects Germany's overall budget deficit to come in at 0.9 percent of gross domestic product this year.

She pointed to the favorable situation concerning tax revenues owing to a robust labor market and relatively low unemployment.

"Tax income has developed positively," Merkel said, adding, though, that no more hikes are envisaged for the time being so as not to hamper domestic consumption.

BDI President Hans-Peter Keitel warned that recession elsewhere is bound to have an impact on the German economy to a larger extent in the months ahead as it could become even harder to export goods to European trading partners.

hg/mkg (Reuters, AFP, AP, dpa)