Speaking to the European Parliament, Mr Draghi acknowledged that austerity in Europe - which has brought waves of protest in Greece, Spain and beyond - has curtailed growth without doing much to reduce fears that governments may be unable to repay their debts.

He said austerity - spending cuts and tax rises - "has been undertaken and is starting to reverberate its contraction effects, and we haven't seen the benefits".

"What is most present in my mind is to have a 'growth compact'," the ECB boss said.

Chancellor Angela Merkel backed European Central Bank President Mario Draghi's call to focus on spurring economic growth, as German officials rejected charges they are fixated on budget austerity to fight the debt crisis.

Europe needs growth "in the way that Mario Draghi, the president of the European Central Bank, said it today, that is in the form of structural reforms," the chancellor told a conference of her Christian Democratic bloc in Berlin today.

"We are just in the middle of the river we are crossing, the only way out is to persevere,"

as the scorpion said to the donkey carrying him over the river...

The power of knowledge is in mortal combat with the knowledge of power. It really is that simple... That's the Edenic apple we are all munching on.

This is actually pretty impressive intellectually (in a sick sort of way).

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman