Professor John McHale:

I agree with the distinction between an evaluation of a fiscal policy and a broader macroeconomic policy at European level and what is happening at the Irish level. There are clear signs that overall European policy, both monetary and fiscal, is too contractionary given the weak growth and weak employment performance of the European economy. On the fiscal side, under the rules of the Stability and Growth Pact, it has a national focus. It focuses on each country in order to reach budgetary targets but not enough attention has been placed on the overall fiscal stance of the eurozone economy, particularly no real source of pressure is placed on the stronger countries, that Dr. Donal Donovan mentioned, to use their fiscal space. It could give the eurozone a more expansionary stance which is important for improving Ireland's growth performance and the European economy more generally.

On the monetary side, the institutional set up of the European Central Bank has almost completely focused on price stability. The US Federal Reserve has a dual mandate that focuses on employment and price stability. Unlike the Federal Reserve, the single mandate in the European context creates a bias against taking the type of stimulatory policies that may be needed.

The European Central Bank has done some important things but not quantitative easing. That is not part of its toolkit. I am talking in terms of the longer-term refinancing operation, LTROs, which provide finance to banks for a three-year period by way of a huge injection of liquidity.