Eurozone economy has 'clearly' seen recovery, says ECB's Coeure

Fears about a Greek default have been rumbling for weeks, but despite the current uncertainty, an executive board member of the European Central Bank (ECB) has stressed that economic recovery has "clearly" arrived across the bloc.

Greece is under severe pressure to demonstrate to its European counterparts that it is capable of delivering the reforms required to unlock the additional bailout funding needed to prevent the beleaguered country defaulting on its debts.

But the government's efforts have been hampered by dissent at a local level, with mayors across the country this week protesting against a decree to hand over control of their budgets to the state in an effort to help balance the books.

In the face of these problems, the ECB's Benoit Coeure told AFP on Thursday: "The eurozone recovery is clearly there. 

"Growth is coming back, all business and household confidence indicators are pointing upwards. And the good news is that this recovery is rooted in domestic demand, and in consumer spending in particular."

While his message was largely upbeat, Mr Coeure acknowledged that there is still much to be done. He conceded that at present the recovery is "insufficient" and is also unequally spread from country to country, with some members of the single currency enjoying strong economic growth and others continuing to struggle.

As such, the ECB heavyweight admitted there is still concern that the improvements are cyclical - "merely a flash in the pan", as he put it - rather than being rooted in anything more solid.

In a bid to kickstart the economic revival, the central bank implemented a bond purchase programme worth €1 trillion at the beginning of March, with plans to buy €60 billion of bonds per month until September 2016.

This move - coupled with a drop in energy prices and the weaker euro - means the ECB is "injecting a lot of fuel" into the eurozone economy, Mr Coeure said.

However, he stressed that the ECB cannot do all of the work itself. Governments must also play their part by creating conditions that are conducive to investment.

For current rates of growth to become long-term, reforms in the labour market and general improvements in the business climate are required, he explained.

"The real test will be a pickup in investment in Europe this year," Mr Coeure added. "Favourable financing conditions are needed. That's what we're doing, that's the role of the ECB. But people must also have plans and the desire to do business. That's the task of the governments."

As for the value of the euro, the potential for a Greek exit and a general lack of encouragement for investors saw it maintain a tight range of between $1.0700 and $1.0800 yesterday.

Discussing the future of Greece as a member of the single currency, the ECB executive board member said there is still much work to be done, but that an exit from the euro was not a "working hypothesis".

"A very large majority of the Greek population wants to remain in the eurozone," he insisted. "It's up to the Greek government to take the necessary action to make that possible, which is to say, reach agreement with the euro area."