Christine Lagarde does not envisage the slightest beginning of negotiations on the debt linked to the coronavirus pandemic. The cancellation of this one is “unthinkable” and would be “a violation of the European treaty which strictly prohibits the monetary financing of the States”, explains in fact in the Sunday newspaper the President of the European Central Bank (ECB).
“This rule is one of the fundamental pillars of the euro,” explains Christine Lagarde. “If the energy spent demanding the ECB’s debt cancellation were devoted to a debate on the use of this debt, it would be much more useful!” What will public spending be allocated to? In which sectors of the future to invest? This is the essential subject today ”.
“We owe ourselves 25% of our debt”
More than 100 economists on Friday launched a call to cancel public debts held by the ECB to facilitate social and ecological reconstruction after the Covid-19 pandemic. “We owe 25% of our debt to ourselves and if we pay that back, we’ll have to find it elsewhere, either by borrowing again to roll over the debt instead of borrowing to invest, or by raising taxes, or by reducing spending, ”explain these economists, including 50 French, including Thomas Piketty from the Paris School of Economics, former Belgian Minister Paul Magnette and former Hungarian European Commissioner Andor Lazlo.
“All the countries of the euro zone will emerge from this crisis with high debt levels,” said Christine Lagarde for her part. But “there is no doubt that they will manage to repay it. Debts are managed over the long term. Investments in sectors that are crucial for the future will generate stronger growth ”.
“2021 will be a year of recovery”
“The recovery will create jobs, and therefore unite. We are moving towards another economy, more digital, greener, more committed to climate change and to maintaining biodiversity, ”according to the President of the ECB. In the immediate future, she considers that “2021 will be a year of recovery. The economic recovery has been delayed, but not undermined. It is obviously eagerly awaited ”. However, “we are not immune from still unknown risks”, and “we will not regain the levels of economic activity before the pandemic before mid-2022”, she warns.