The consensus view on what to do about the European economy is clear. Faced with the unpleasant combination of “fire and ice”, above-target inflation and growth decelerating markedly below the potential rate, the European Central Bank has clearly insisted on its priority: avoid getting burnt.

Unlike other central banks it has refused to cut rates, while the rising euro, falling stock markets, widening interest-rate spreads and heightened caution by banks have significantly tightened monetary and lending conditions. It continues to point to the risk of “second-round effects” of higher import prices on wages, and top officials speak on how to increase the competitiveness of the European economy.