The director of the European department of the IMF, Alfred Kammer, believes that taxpayers will have to pay for the packages with state checks to help pay high energy bills. An alert made by the official this Friday in Washington in the presentation of Europe’s prospects for next year.
Alfred Kammer therefore draws attention to the difference in the budgetary impact of supporting 20% or 40% of the most vulnerable families, a difference that ranges from 0.4% of GDP to spending of 1% of GDP.
In this sense, “support measures for households and businesses must be temporary and must be more targeted to ensure that their fiscal costs remain sustainable and – this is crucial – to ensure that energy prices encourage lower energy consumption. energy”, defends the IMF.
But the challenges are not just political. Furthermore, “central banks should continue, for the time being, to raise interest rates even in the euro area. And a more restrictive monetary policy stance may be necessary in 2023, unless the deterioration in economic activity materially reduces growth prospects”. long-term inflation. As financial conditions tighten, financial stability risks are resurfacing; Regulators need to closely monitor vulnerabilities, such as testing banks’ exposures to household and corporate liquidity crises,” he stresses.
All these scenarios are conditioned by a possible escalation of the economic war where “a total blockage of Russian gas flows to Europe, combined with a cold winter, could result in gas shortages and rationing, causing GDP losses of up to 3% in some Central and Eastern European economies, and another rise in rising inflation across the European continent.”
Source: TSF
