Mario Draghi, the president of the European Central Bank, has vowed to do “whatever it takes to preserve the euro” in a speech that cheered world markets today.
Speaking at a high-profile summit in London to promote investment off the back of the Olympics, Mr Draghi argued that the “euro is irreversible” in comments that suggested he was confident that Greece will not leave the single currency. Markets bounced strongly in reaction, as the euro rallied and the FTSE 100 index of the country’s biggest listed companies rose by 1.38 per cent.
Mr Draghi told the conference of nearly 200 chief executives of some of the world’s most powerful companies and cash-laden sovereign wealth funds: “The progress [in the Eurozone] has been extraordinary in the past six months. There has been progress in undertaking deficit control, structural reforms have been remarkable.”
He also said that plans for a European banking regulator will be unveiled in September. Germany demanded the establishment of this body, which would supervise the euro zone’s 25 biggest banks, but it is unlikely to be up-and-running until sometime next year.
Bank of England governor Sir Mervyn King re-iterated his argument that “relying on the taxpayer to bail-out banks is no longer an option”. However, he argued that despite the problems caused by the City that London remained “a natural centre for global banking”.
To highlight the economic advantages that the government hope to make from the games, David Cameron opened the conference, while business secretary Vince Cable and London mayor Boris Johnson also spoke.
Mr Cameron declared that “the global competitive race has never been faster”, promising to stick to the government’s economic plan by keeping national debt under control. He also promised to maintain a marginal interest rate – it is currently at a historic low of 0.5 per cent – and declared that “Britain is back open for business”.
However, the prime minister’s comments come against a backdrop of grim economic data, which shows that the country has been stuck in economic decline for the three quarters in succession. On Wednesday, analysts were shocked when the economy contracted by 0.7 per cent between April and June, as projections had been closer to a 0.2 per cent decline.
This has led to calls from Lord Oakeshott, the Liberal Democrat peer who is a close ally of Mr Cable, for Chancellor George Osborne to quit. Having already admitted that he would “probably” make a fine chancellor, Mr Cable looked to distance himself from suspicions that he wanted Mr Osborne’s job by saying at the fringes of the conference: “He [Mr Osborne] is a good chancellor doing a good job. We work well together – surprisingly to some people.”
Mr Johnson gave a typically ebullient speech, describing the Olympics as “a wonderful global calling card for British engineering and the British construction industries”. He added: “Despite everything, we still have in this city the largest financial services sector in the world. Isn’t that a great thing?”
The mayor also said that there was interest from sovereign wealth funds to back the establishment of a new hub airport in the Thames Estuary.