Lagarde: "The ECB has a whole battery of exceptional tools to use"
ECB: "Expected improvement in 2021. With Draghi spreads to record low levels"
Share
April 11, 2021 The US economy will return to pre-crisis levels Covid this year thanks to strong fiscal stimulus, while in Europe "it will not happen until mid-2022 and, unlike the US, we will not return to pre-crisis growth levels. which means we may have permanently lost two years of growth. "
The alarm was raised by Fabio Panetta, a member of the Executive Committee of the ECB.
In an interview with El Pais, Panetta replies that "there is a significant risk of divergence" when asked whether he is concerned about the potential damage to the economies of Spain and Italy if the economic stimulus is withdrawn too soon.
"In general, it would be unwise to bet on a quick recovery. There are risks that can prevent the planned improvements from being realized. And even if we manage to get out of the pandemic soon, we will realize that the damage to the economy is greater than what we see. now, "Panetta said.
"Nothing prevents the euro zone from having a robust recovery - he noted - but for this the economy must be supported with the appropriate level of monetary and fiscal stimulus. Prudence tells us that it is better to inject too much stimulus than to fall short. "
The answer must first of all be the use of the instruments that the Union has equipped itself against the pandemic shock, but more could be needed.
"We need to make the € 750 billion EU Recovery Tool operational" and "we should consider providing more fiscal support to bring demand back to its potential faster," says Panetta.
Furthermore, for the ECB, faced with inflation still far from the 2% target, waiting risks being "even more expensive".
"We have - explains the former director general of the Bank of Italy - room for maneuver because we have used only a part of the 1.85 billion" of Pepp.
"But if we spend this money and we are still below target, then we will have to do more."