European Central Bank President Christine Lagarde yesterday urged European Union leaders to quickly agree to a recovery package, pulling the economy out of a “massive downturn”, or risking morale in the markets, which expects a quick deal.
Lagarde delivered her speech to a meeting of European Union leaders, via closed-circuit television, to discuss how to design recovery from the deep recession, caused by months of public isolation measures aimed at combating the spread of the Corona virus in most European countries.
"The economy of the European Union is experiencing a massive downturn," Lagarde told the meeting, according to officials.
"The decisive and effective action of national governments and European actors has demonstrated its value, paved the way for a recovery towards the end of the year, and helped buy some time," she added. This is apparent in market sentiment, but failure to implement may lead to a change in sentiment. ”
Lagarde reiterated expectations for the European Central Bank that the eurozone economy will contract by 13% in the second quarter, compared to the first quarter, and to shrink overall by 8.7% in 2020, before recovering to record 5.2% growth in 2021.
She said that the worst impact of the pandemic on the labor market has not yet occurred, and that the unemployment rate, which currently stands at 7.3% of the labor force, may rise to 10%, which affects young people in particular.
She added, "We have in our hands the formulation of the recovery that we wish to see," adding that "the recovery package must be advanced, fast, flexible, and strongly rooted in economic reforms." The sooner the package is agreed upon, the better for the European Union economy. ”
Christine Lagarde:
"Effective action by national governments and European parties paved the way for a recovery towards the end of the year."