The ECB Quantitative Easing [QE] programme began in September 2015 and the ECB is currently buying €80 billion of bonds every month.

Looking at the Eurozone economy since July 2008, the ECB’s balance sheet has increased by 209%; Money Supply (M2), the total amount of money in our bank accounts, has increased by 120%; the amount of lending in the Eurozone is now at 99%, less than where we were in 2008.

In economic theory all these three measures should move together when an economy is in normal mode.

The ECB believes with borrowing rates at close to zero, the private sector will borrow cheap money and spend it thus increasing spending and driving up inflation to its 2% pa target. But that is not happening, households and corporates are repaying debt and there are little or no borrowers in the market.

Banks balance sheets contain assets on one side- loans advanced to customers and liabilities on the other – deposits from customers. In order to grow banks must lend, so filling one side of the balance sheet artificially does not help economic growth, in fact it damages it. Consumer spending is up by only 0.7% in 8 years.

All wealth generated within an economy is either spent or saved – paying down debt is savings. In every Eurozone country except Greece, the private sector is no longer spending all its income but rather paying off its debts or increasing its savings pool. Spain is currently saving more than 7% of its GDP and Ireland more than 5%.

If the private sector cannot or will not borrow, then the public sector must come to the aid of the country and take up the slack in order for the country to grow and prosper. However, the 1998 Maastricht Treaty imposes a legally binding borrowing limit of 3% of GDP on all Eurozone members.

These rules were made before the currency economic crisis occurred and must be relaxed to allow the public sector to borrow the excess savings and spend it, thus facilitating growth, employment and spending.