The president of the European Central Bank (ECB), Christine Lagarde, warned on Thursday the heads of state and government of the European Union (EU) that the gross domestic product (GDP) of the eurozone could fall as much as 15 % this year as a consequence of the coronavirus.
Lagarde, who participates in a telematic European summit on community recovery plans, warned that GDP could contract 5% in a mild scenario, 9% in a medium scenario and 15% in a severe scenario, sources told Efe with knowledge of the deliberations.
In all three cases, the fall of the economy in the euro area would be greater than the decrease of 4.5% in 2009, the worst year of the financial crisis.
Lagarde called on leaders to avoid doing “too little too late” and insisted that a recovery fund must be fast, firm and flexible.
The head of the European issuer urged “collectively guarantee that all member states can take the necessary fiscal actions to overcome this crisis,” according to the same source.
Community leaders this afternoon are debating a plan to relaunch the economy after the pandemic, which would be based on a recovery fund – for which amounts of around 1.5 trillion euros are being considered – and on the community budget.
The 27 disagree on how the fund should be financed, for which some countries are demanding the issuance of debt backed by the EU as a whole, and on whether the aid should be distributed in the form of non-refundable grants or conditional loans.
The participants are expected to instruct the European Commission to present a proposal in the coming days to establish this fund and for the next multiannual community budget (2021-2027), so that the details of the strategy would not be closed today.