ECB: serious risks for the economy Alarm over Italy for the deficit

The coronavirus pandemic, despite the "encouraging" prospects given by the start of vaccinations, "continues to generate serious risks for public health and for the economies of the euro area and the rest of the world".

The ECB writes in the Economic Bulletin, according to which the pandemic "continues to cloud the global economic prospects".

In the euro area, the second wave and the intensification of containment measures starting from mid-October "should lead to a significant new decline in activity in the fourth quarter, albeit to a much lesser extent than in the second quarter of this year ". 

Italy, together with Spain, France and Slovakia, will record the "highest" deficits in the Eurozone in 2021 with percentages exceeding 7.5% of GDP.

However, "due to the sharp contraction of the euro area economy, an ambitious and coordinated fiscal stance will remain essential until there is a lasting recovery".

The ECB writes this in the economic bulletin, after the European Commission, for Belgium, Greece, Spain, France, Italy and Portugal, asked for attention to medium-term fiscal sustainability.

the ECB notes that "budget support should nevertheless continue to remain at high levels" and "as long as the health emergency persists and the recovery is unable to sustain itself, it will be important to extend the temporary measures in order to avoid the possibility of changes abrupt and significant (cliff effects) ".

The Governing Council of the ECB "remains ready to adapt, where appropriate, all the tools at its disposal to ensure that inflation continues to steadily approach the target".

It can be read in the economic bulletin of the ECB which reiterates the relaunch of the measures taken in December to support economic activity and inflation in the euro area: in particular the relaunch of the debt purchase plan for the euro area to 1,850 billion euros. pandemic emergency, extended "at least until the end of March 2022", and the strengthening of the Tltro-III maxi-financing for credit to the economy.