Faced with the second wave of COVID, Lagarde calls for speed on the European recovery plan

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Paris | “It is crucial” for the recovery of the euro zone, where the new restrictive measures “weigh on the recovery”, that the European recovery plan “is a success” and the money paid out as soon as possible, warned the President of the ECB, Christine Lagarde, in an interview published on Monday.

“If it is not targeted, if it gets lost in administrative maze and does not irrigate the real economy to orient our countries towards digital and green, we will have missed a historic opportunity to change the situation” , she warned in an interview with “World” published Monday on the website of the French daily.

However, the negotiations on this exceptional plan of 750 billion euros, adopted in July by the Twenty-Seven to help Member States cope with the economic consequences of the health crisis, are stumbling.

MEPs demand a dissuasive mechanism to make European subsidies conditional on respect for the rule of law, which Poland and Hungary oppose, which blocks the whole process.

Asked about the risk that these 750 billion euros will be distributed “too late”, the President of the European Central Bank replied: “the objective of the Commission is to be able to pay them in early 2021 and it must absolutely be kept”.

“The ball is in the court of the States, which must present their recovery plans – some are already ready -, and of the Commission, which will have to sift them quickly. Political leaders will also have to move quickly, especially national parliaments to adopt the mechanisms. ”

“It is crucial that this exceptional plan, which has lifted important taboos in some countries, is a success,” she insisted.

In the same spirit, French President Emmanuel Macron called on Friday, after the summit of the Twenty-Seven in Brussels, to show a “spirit of compromise” to unblock negotiations on the European budget, which is backed by the Recovery plan.

Because, for lack of “small step” on the part of the States, the negotiations are “at a standstill”, acknowledged Thursday the President of the European Parliament, the Italian David Sassoli.

A million jobs saved

But time is running out.

“The second epidemic wave in Europe, especially in France, and the new restrictive measures which accompany it (…) weigh on the recovery”, warned Christine Lagarde.

The ECB is currently forecasting a drop in GDP of 8% in the euro zone in 2020, but “if the situation deteriorates, this will obviously darken our forecasts”, which will be revised in December, she admitted.

However, the Frankfurt-based institution has not said its last word.

“If more must be done, we will do more”, assured the Frenchwoman, suggesting that the emergency plan to face the pandemic (PEPP), which consists for the ECB to buy back the debts of the States at maturity and thus enabling them to finance their costly stimulus plans, could benefit from a further extension in December.

Initially 750 billion euros in March, its amount was increased to 1350 billion in June. A plan which, according to the ECB’s calculations, generated “the equivalent of 1.3 points of growth” and “saved a million jobs in the euro zone,” said Ms. Lagarde. While keeping the rates at which households and businesses borrow at a very low level, “around 1.4% -1.5%”.

Another major advance compared to the 2008 crisis, central banks are no longer “alone in the maneuver”: “budgetary support” (that is to say the European recovery plan) now works “hand in hand. with monetary support ”.

Hoping, according to the big money, that this crisis will make it possible to move forward on the establishment of a “common budgetary tool specific to the euro zone”.

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