European Central Bank board member Isabel Schnabel has warned against a failure to proceed with the European Union’s Recovery Fund, saying such a step would be an “economic disaster for Europe.”
The fact that the fund and national aid programs will lead to significantly growing national debt levels was not a problem as long as the spending boosted sustainable economic growth, Schnabel told German magazine Der Spiegel in an interview published on Friday.
“The increase in public debt is inevitable and sensible in the face of this crisis of the century, as long as the expenditures sustainably boost growth,” she said.
Germany’s constitutional court put the ratification of the EU recovery fund on hold last month, as long as it was looking into an emergency appeal against the debt-financed investment plan. [Reuters]