Germany should do more to boost investment, demand and productivity rather than railing against the low-interest monetary policies of the European Central Bank (ECB), its president Mario Draghi has said.

The low interest rates of the Frankfurt bank have caused ructions in Germany, with conservative politicians and media outlets accusing Mr Draghi and his officials of “disappropriating” Germany’s assiduous savers.

However, Mr Draghi insisted ECB monetary policy had helped “insulate” the euro area from a steep slowdown in world trade. His critics took current economic stability as a given and ignored the counter-factual scenario where, according to ECB simulations, failing to adopt expansionary measures would have pushed euro area GDP “cumulatively at least 1.5 per cent lower between 2015 and 2018…with worse outcomes for inflation too”.

Policies

“I find it hard to reach the conclusion that…the outcome of our policies has been – or will be – to redistribute wealth and income in an unfair or unequal way,” he said.

In a Berlin lecture Mr Draghi conceded the distortions and other problems caused by the ECB’s zero benchmark rate and low longer-term rates. But he insisted his bank could only act when “fiscal and structural policies” were implemented and began to be felt in the euro zone economy.

His Berlin remarks were a clear signal to Berlin’s federal government which, in its pursuit of a balanced budget, has throttled infrastructure spending while celebrating its trade surplus as proof of its powerhouse export sector – to the frustration of its EU partners.