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Christine Lagarde says countries must not `brutally` pull stimulus

International desk || shiningbd

Published: 15:12, 21 February 2021   Update: 15:13, 21 February 2021
Christine Lagarde says countries must not `brutally` pull stimulus

Christine Lagarde doesn`t share their concerns.

Some politicians are worried that countries will borrow too much to prop up the economy over the coming year. Christine Lagarde doesn't share their concerns.

The European Central Bank president told CNN Business' Richard Quest on Thursday that her biggest fear isn't that the European Union will accumulate a mountain of debt, but that governments could "brutally" withdraw job guarantees and income support before the time is right.

Such programs, she said, must be eased "gradually" and with care.

"That's the moment which I think is the most difficult, the most subtle, and where judgment will have to be applied," Lagarde said in the interview, which will air on CNN International's "Quest Means Business" show at 3:00 p.m. ET.

Governments unleashed trillions of dollars in relief spending over the past year to cushion the economic blow dealt by the Covid-19 pandemic, adding to unprecedented support from central banks like the ECB. European leaders also approved a €1.8 trillion ($2.2 trillion) recovery package and budget to help strengthen the bloc's economies once the crisis passes.

But Lagarde emphasized that even as the economy starts to improve and the recovery takes hold, politicians should not withdraw support prematurely.

The ECB, she added, is "in for the long run."

In its most recent forecast, released in December, the central bank predicted that Europe's economy will expand by 3.9% in 2021, with output reaching pre-pandemic levels by the middle of 2022.

Lagarde noted that such forecasts hinge in large part on the vaccine rollout, which got off to a slow start in the European Union.

Late last month, a fight between EU leaders and AstraZeneca (AZN) spilled into public view after the vaccine maker said it would be delivering fewer doses than promised.

ShiningBD/MB