Between March and May, the euro zone is likely to decide when and how governments would start tapering support to their economies as vaccination campaigns allow the lifting of lockdowns and economic activity picks up, according to top euro zone officials. Finance ministers of the 19 countries recently discussed the European Commission’s forecasts.

The forecasts say the euro zone would rebound less than expected this year, and the ministers decided to keep all measures intact for now, according to a global newswire.

“This reaffirms the need ... for supportive economic policies to remain in place for as long as they are needed,” the ministers’ chairman, Paschal Donohoe, told a news conference, noting the large uncertainty surrounding the recovery.

“There is an inherent risk of withdrawing support too early as opposed to withdrawing it too late,” he said.

Euro zone governments have made available trillions of euros to economies since the start of the pandemic in February 2020 in fiscal stimulus and various measures to support corporate liquidity, loan repayment, tax deferrals and salary subsides.

To make cash available, the 27-nation bloc last year suspended its budget rules that limit government borrowing until the end of 2021.
But as the economy gradually regains its footing, the blanket support measures would need to become more targeted and calibrated to help only viable firms, rather keep alive those that would have collapsed even without the COVID-19 crisis.

Fibre2Fashion News Desk (DS)

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