October 28, 2020

The ECB notes that the recovery is “uncertain and uneven” and does not expect it to be complete until the end of 2022



It goes for long. The president of the European Central Bank, Christine Lagarde, appeared this Monday before the Economic Commission of the European Parliament to affirm that “the recovery is being incomplete, uneven and uncertain”, while the effects of the pandemic continue to affect the entire Euro zone to “companies and workers, who lose their jobs and have a future full of uncertainties.”

The European Central Bank improved its forecasts for 2020, putting the fall of the euro zone at 8.0% in 2020. However, the growth of 5% in 2021 and 3.2% in 2022 means that “it is only expected for real GDP in the euro area to recover to pre-crisis levels by the end of 2022 “.

But nothing is certain: “The strength of the recovery continues to depend largely on the evolution of the pandemic and the success of containment policies. The public health crisis will continue to affect economic activity and pose downside risks to prospects. economic “.

Lagarde explained that while “economic activity in the euro area recovers in the third quarter, this recovery remains incomplete, uncertain and uneven. Consumer spending has resumed significantly, but they remain cautious due to stress related to their job and income prospects. Similarly, business investment has been recovering, but lower demand and high uncertainty continue to weigh on companies’ investment plans. ”

In this context, Largarde has defended that “job retention plans [como los ERTE en España] and national guarantees on bank loans remain critically important factors in reducing uncertainty and softening the impact of the pandemic. ”

The president of the European Central Bank has also urged the launch of the anti-crisis fund: “It is important to ensure that the funds are used not only correctly, but in a way that improves long-term growth and supports the common objectives of the If we get it right, the EU recovery fund could be the turning point that Europe needs, in terms of modernization, resilience and prosperity. ”

The socialist spokesman in the parliamentary commission, Jonás Fernández, has invited Lagarde to make decisions related to the fall in inflation in the EU. Lagarde’s mandate is to keep inflation close to 2%, but below 2%. Lagarde herself acknowledged that “the sharp decline in economic activity earlier this year has weakened price pressures. Annual headline inflation in the euro area stood at -0.2% in August and is expected to to remain negative in the coming months, reflecting the effects of previous falls in energy prices, a stronger euro and a temporary reduction in the VAT rate in Germany. The ECB expects annual inflation to rise gradually, from a average from 0.3% in 2020 to an average of 1.0% in 2021 and 1.3% in 2022 “.

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