On Monday 15 June, the OECD's Chief Economist, Laurence Boone, certainly welcomed the proposal for a European Recovery Plan submitted by the European Commission at the end of May. However, “ultimately the level of fiscal stimulus, at both European and national levels, may need to be increased”, she said in a debate with the European Parliament's Committee on Economic and Monetary Affairs.
According to the economist, “it is important that suspension of fiscal rules remains unchanged until 2021”, because next year will be the year when national recovery budgets will be needed.
The OECD predicts a fall in GDP of between 9% and 11.5% in the European Union this year.
Ms Boone also advocated measures to anticipate, from Autumn 2020, the budgetary means for economic recovery. Implementing the fiscal stimulus in 2023 will be “too late for many companies and households”, she said.
Ms Boone also noted the risk of an asymmetric recovery, which could particularly affect Europe due to the nature of the public support provided. Member States with greater budgetary margins are able to invest directly in enterprises, while others will favour the provision of state guarantees. However, should the economic crisis persist and risks materialise, companies going bankrupt will have an impact on the signature of the country of origin and the servicing of its debt.
Furthermore, the OECD's Chief Economist noted the continuing lack of a specific euro fiscal instrument. Preserving the integrity of the single currency primarily remains the responsibility of the ECB, she noted. (Original version in French by Mathieu Bion)