Monday 1 March 2021
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independent - 1 month ago

Donohoe says new Covid strains will hurt economic recovery

The surge in Covid-19 cases and the emergence of new strains will slow recovery in the eurozone economy this year, the Minister for Finance has said. Speaking to MEPs in his capacity as head of the 19-member Eurogroup of finance ministers, Paschal Donohoe said that the economic outlook has improved compared to 2020. “The roll-out of vaccines gives us reason to be more optimistic, although there is still some way to go,” Minister Donohoe said on Monday. The European Central Bank predicts economic growth in the eurozone will rebound from -7.3pc in 2020 to 3.9pc this year. The Central Bank of Ireland s latest forecasts show Irish GDP growth of 3.8pc for 2021. Mr Donohoe said countries should continue spending for now, but agree on how to withdraw emergency measures by the middle of the year. “This is not about an imminent withdrawal of fiscal stimulus,” Mr Donohoe told the European Parliament’s economic affairs committee. There must be no cliff-edges.” Mr Donohoe said the pandemic is increasing debt levels across the eurozone and creating new risks”. And he said high mortgage interest rates in Ireland - which are more than double the EU average - were due to the long-term effects of the financial crisis and the increased capital Irish banks have to hold as a result. Meanwhile, speaking to the same committee, EU financial services commissioner Mairead McGuinness warned UK banks they may not see any equivalence decisions from Brussels until later this year. She said the first priority was to agree a memorandum of understanding on financial services with the UK, which both sides agreed in last December’s trade deal should be done by March.


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