As European countries brace for the economic fallout of the coronavirus pandemic, the president of the eurozone group of finance ministers known as the Eurogroup, Mario Centeno, in an interview with five European newspapers including Kathimerini, has underlined the need for “a suitable mix of grants and loans in the recovery,” warning of a new crisis if adequate support is not provided.
“If we front-load the cost of the crisis, we risk financial stability and fragmentation, and with that, we restart [the] negative cycle,” Centeno said, adding that Europe must respond “in a way that does not repeat the second wave of economic problems we had before.”
Questioned about the risks of a double-dip recession, where the economy slumps just as it is beginning to recover from a previous recession, Centeno indicated that a recovery fund European Union leaders have agreed to set up would “play a critical role in averting that scenario.” “If it is sizable it will help kick-start our economies, establishing a level playing field and, importantly, spread the costs of crisis over time,” Centeno said. This is even more important for countries with larger pre-crisis debt levels, he said. He called for “innovative solutions,” adding that the European Commission is expected to make proposals in the next two weeks.
What is required, he said is “a sizable solution, commensurate to the size of the problem.” “I know that Europe quite often is portrayed as being slow to respond to the challenges it faces, but honestly this time around we proved otherwise,” he said, adding that countries had ultimately shown “a great deal of willingness to compromise.”