Lagarde Calls on EU Countries to Quickly Pay Out Corona Aid

ECB President Christine Lagarde has called on the countries of the euro zone to end their dispute over the EU budget and to quickly pay out urgently needed corona aid.

The “Next Generation EU” financial package, which includes a 750 billion euro reconstruction fund, must be implemented without delay, she said on Thursday in front of the EU Parliament‘s Economic and Monetary Affairs Committee. The package had met opposition from Poland and Hungary this week. Both states vetoed EU financial planning. Therefore, there is a risk that the disbursement of the funds will be delayed even if there is a compromise.

In view of the second wave of pandemics, Lagarde also painted a rather gloomy picture of the economy. “The euro area economy is expected to be hit hard by the impact of the rapid rise in infections and the reintroduction of containment measures,” she said. This jeopardizes the short-term economic outlook. A key challenge will be to bridge the time gap until vaccinations are well advanced and recovery generates its own momentum.

The head of the ECB also confirmed that the central bank would readjust its monetary policy according to the situation. The focus is on the EUR 1.35 trillion pandemic bond purchase program PEPP and the large long-term cash injections for banks – known as TLTRO in the professional world. These have shown their effectiveness. “Hence, they probably remain the main tools for adjusting our monetary policy,” she said. The next interest rate meeting will be on December 10th.

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