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ECB chief Mario Draghi says worst of euro crisis over

2012-03-22 10:11:01

European Central Bank President Mario Draghi has said the worst of the eurozone

crisis is over.

In an interview with Germany's Bild newspaper, he said the situation in Europe

was "stabilising".

Mr Draghi also said that some economic data, including inflation and budget

deficits, showed that Europe was doing better than the United States.

But the latest surveys of purchasing managers, released on Thursday, suggest

European economies could be flagging.

The Purchasing Managers Indexes (PMI) survey thousands of companies and

indicate whether business is expanding or contracting.

The figures for Europe's most important economy, Germany, show that

manufacturing activity shrank in March and new orders fell at the fastest pace

so far this year.

That contributed to a sharp downturn for the whole eurozone, with the PMI index

showing that business conditions deteriorated further in March.

"It's going to be a very poor-looking year at this rate," said Chris

Williamson, chief economist at Markit, the company which compiles the PMI

surveys.

"We had an uplift at the start of the year, which we hoped was the economy

regaining momentum, but it seems to be losing its legs."

The European Central Bank chief Mario Draghi is credited with having deflected

a much more serious crisis by lending European banks large sums at very low

interest rates.

Over two rounds, one in December and one in February, the Long Term Refinancing

Operation injected more than half a trillion euros of new funds into European

banks.

In his interview with Bild, Mr Draghi said: "Last autumn, the situation was

really critical. It could have come to a dangerous credit crunch for the banks.

"As a result, businesses could have gone bankrupt, because they would have been

left high and dry. We had to prevent that."

It may be significant that he chose to speak to Bild, Germany's most popular

newspaper. Mr Draghi, an Italian, has been portrayed in Germany as too loose

with ECB money, in contrast to the more fiscally austere German way

image of Stephen Evans Stephen Evans BBC News, Berlin