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Draghi sells bond buying plan to Germany

Wednesday, October 24, 2012 - 01:45

European Central Bank President Mario Draghi travelled to Berlin to defend his bond-buying plan to sceptical German lawmakers, some of whom are concerned it will stoke inflation or lead to illegal funding of governments. His visit came as business survey data showed the core French and German economies were being sucked into the euro zone turmoil. Joanna Partridge reports.

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A warm welcome for European Central Bank President Mario Draghi in Berlin. But waiting for him, a two-hour grilling from German members of parliament. Draghi travelled to Germany to defend the ECB's bond buying plan - designed to help the euro zone exit its three-year old debt crisis. Behind closed doors he told the lawmakers their fears about the programme are misplaced. Some of them worry it would lead to illegal funding of governments, or would stoke inflation. It's an unusual move. The ECB is independent, and Draghi isn't answerable to German politicians. But his visit showed he realises the importance of keeping the parliament in Europe's biggest economy on side. It came as business survey data suggested even Germany is being sucked into the euro zone's economic turmoil. German manufacturing and service activity fell unexpectedly in October. It had been hoped the ECB's promise of intervention would lift business sentiment, that's not the case says Chris Williamson from Markit. SOUNDBITE: Chris Williamson, Chief Economist, Markit, saying (English): "It certainly lifted the markets and often you see a follow-through in the real economy, that's not happened and in fact the reverse has happened. They've grown gloomier, the expectations index is the weakest since February 2009, so an even worse outlook than we had before. So as to why analysts' expectations were strong, maybe because they've been looking at the official data which were fairly buoyant." October was the worst month for euro zone businesses in over three years - forcing them to cut more jobs to reduce costs. And that's bad news for Germany, France and struggling economies like Spain, which is teetering on the brink of asking for a bailout.

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Draghi sells bond buying plan to Germany

Wednesday, October 24, 2012 - 01:45