The European Central Bank’s plan to rescue Europe’s economy won’t work on its own. Its success hinges on whether people, governments and companies do what’s needed: Spend, hire, borrow, invest, export, expand.
ECB chief Mario Draghi on Thursday delivered on a pledge to do whatever it takes to pull Europe out of a deep and prolonged slump. The central bank will buy 1.1 trillion euros ($1.3 trillion) worth of government and corporate bonds through September 2016 — longer if necessary — to shrink the euro’s value, boost exports and encourage borrowing, spending and hiring.
“The ECB has made its move,” says Jacob Kirkegaard, senior research fellow at the Peterson Institute for International Economics. Now, “the euro area needs to go to work.”
Collectively, the economy of the 19 nations in the currency alliance eked out growth of just 0.2 percent in last year’s third quarter. Now that the ECB has acted, here are five things the economy needs to revive itself: Government spending, consumer confidence, more exports, economic reforms and stronger banks.
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