This was stated by the head of the European Department of the IMF and in charge of leading the work of the entity’s technicians during the rescue of Greece or Portugal, Poul Thomsen, in a blog published on the agency’s website.
“In the largest economies in Europe, non-essential services closed by government decree represent a third of production. This means that each month that these sectors remain closed translates into a drop of three percentage points of annual GDP, and that before taking into account other interruptions and side effects to the rest of the economy are taken into account, “said Thomsen.
In the opinion of the Danish, who will retire at the end of next July, a “deep” recession in 2020 is the Old Continent is an “inevitable conclusion”.
Thomsen has assured that the European welfare systems and social models “will facilitate” assistance and help to companies and households, although not without risks, since these systems “were not built to meet a demand of such magnitude.”
“All the countries of Europe will need to respond aggressively to this crisis, in a way that is courageous and proportional to its scale. If there has ever been a time to use the mattresses and the available fiscal space, surely this is it,” stressed the IMF technician.
In this sense, it has considered “critical” the decision of the ECB to improve the liquidity of the financial and banking system, as well as its purchase program of 750,000 million euros.
It has also welcomed the intention of some Member States, such as Austria, the Netherlands or Germany, to use the European Stability Mechanism (ESM) to ensure that countries with “high public debt” have the necessary fiscal space to react to this crisis properly.