The European Union must release the money intended for economic recovery after the Coronas pandemic ‘without delay’. That is what Christine Lagarde, president of the European Central Bank (ECB), said in a hearing before the European Parliament.
The call made by Lagarde comes as Hungary and Poland have vetoed the EU’s multi-annual budget and the EU’s correlation Fund, which together account for EUR 1800 billion. This is crucially important, while many European countries, by rapidly increasing COVID-19 burden, are partially shutting down parts of public life again.
Lagarde warned that this second resurgence of the virus could seriously harm the eurozone. By releasing the recovery funds quickly, euro area countries with tight budgets would still be able to increase public spending. This is “critical” to soften the economic impact of the pandemic, said Lagarde.
Hungary and Poland refuse to accept the multi-annual budget because receiving EU funds is subject to strict conditions for maintaining the rule of law. The governments of the two member states are accused of restricting the independence of the judiciary and of interfering with critical journalists.
Lagarde called the positive news about the development of vaccines encouraging, but warned that it would take a long time before it was widely available. It is therefore necessary to support the economy. “The main challenge is to bridge the period until much has been vaccinated.”
The central bank itself will also come up with additional incentive measures next month, with which the ECB President reiterated its earlier promise. Since the outbreak of the pandemic, the ECB has been developing a programme to buy up bonds worth EUR 1350 billion. The ECB also provides extremely cheap loans to banks so that sufficient money flows into the economy in times of crisis.