The head of the European Central Bank hit out at the political paralysis gripping the region as he warned the eurozone’s set-up was “unsustainable”.
ECB President Draghi arrives at the European Parliament economic and monetary affairs committee in Brussels on Thursday. Photo: Reuters
Mario Draghi said the central bank could not “fill the vacuum” left by member states’ lack of action as it was claimed the zone is on the point of “disintegration”.
Amid escalating talk of a potential bail-out for Spain, the president of the ECB said the central bank was powerless to stop the debt tornado. “It’s not our duty, it’s not in our mandate” to “fill the vacuum left by the lack of action by national governments on the fiscal front,” he said.
Christine Lagarde, the head of the International Monetary Fund, last night denied that an IMF bail-out of Spain was being prepared.
“There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support,” she said, following a meeting with Spain’s deputy prime minister, Soraya Saenz de Santamaria.
Olli Rehn, the EU’s top economic official, called for urgent action to “avoid a disintegration of the eurozone.” The economic affairs commissioner said that politicians had made progress but it had been “uneven and seemingly inefficient.”
Underling the fears gripping many investors, the FTSE closed down 7.5pc in May, suffering its worst month since February 2009 when the banking crisis was at its height.
A raft of poor economic data in America compounded fears for the eurozone and the global economy. US GDP expanded by just 1.9pc in the first quarter, rather than the 2.2pc first estimate, while jobless claims climbed.
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