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The European Central Bank Warns Against Widespread Economic Closures
European Governments must be selective in introducing restrictions to slow the spread of coronavirus that limit economic activity, and must continue to pursue fiscal incentives to support businesses and households, European Central Bank officials said.
Yazar: Tom Roberts
Yayınlanma: 31 Ekim 2020 23:36
Güncellenme: 23 Kasım 2024 05:12
The European Central Bank Warns Against Widespread Economic Closures
European Governments must be selective in introducing restrictions to slow the spread of coronavirus that limit economic activity, and must continue to pursue fiscal incentives to support businesses and households, European Central Bank officials said. The pandemic is testing health systems, and large eurozone countries have taken restrictive measures this week. These will again significantly reduce activity in the services sector, which has not yet recovered from the deep spring recession. "We must try to defeat the virus without shutting down the economy completely, because the consequences for the loss of economic activity are very, very significant," said the Bank's Vice President Luis de Guindos. The bank has made it clear that it will adopt further monetary stimulus in December. The new lockdowns increase the likelihood of a double-bottomed recession. However, central bankers also warned that the role of monetary policy is limited and that governments must increase fiscal stimulus. Executive Board member Yves Mersch thinks more government help is needed in this situation, as monetary policy is not here to help individual firms. This is the role of budgets, and governments should increase fiscal interventions. Most governments have accepted public guarantees to prevent the collapse of viable companies. Public debt has risen sharply and some governments are considering using taxpayers' money more selectively. However, this precaution may cause banks to restrict lending, which could cause funding problems in a situation where liquidity in the sector is at record. "It is very important that fiscal stimulus measures are gradually reduced in line with the economic recovery," de Guindos said. "We don't want to get into a situation where we quickly reduce incentives, because that would cause an even sharper fall."İLGİLİ HABERLER
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