High levels of public opinion could prevent governments from facing long-term economic challenges and pushing them to low growth, warns its vice president (ECB), Louis De Gintos. Speaking to Euro Finance Week in Frankfurt, the Spanish ECB official said that the expansion of primary budgetary deficits that push debt volumes to higher levels could lead to a lack of space for spending on tackling climate change, defence expenditure, digitisation and weak productivity. According to Bloomberg, De Gindos said that “the fiscal slip or the questions surrounding fiscal consolidation marches could cause further state risk assessment”, adding that “current major primary deficits will also make it harder for governments to support the economy if adverse shocks occur.” The comments come two days before the ECB’s two-year financial stability review, which will assess the increasing threats to banks that are the main source of funding for the operations in the region. Investments are lagging behind recently amid uncertainty surrounding economic prospects, with Donald Trump’s re-election to the US presidency being another danger. “The balance of macro-risks has shifted from concerns about high inflation to fears of economic growth,” De Gintos said. “Inflation has moved closer to our 2% target”. De Gidos is known for his concern about public debt. Just two months ago, he had made statements that directly touch Greece. At the time, the central banker had expressed the view that eurozone countries with more than 100% debt should make financial adjustments. The ECB Vice-President’s labelling directly concerns our country, as Greek government debt amounts to 158% of GDP. This year, according to budget forecasts and despite encouraging messages from the economy, it is not expected to close below 152.3% of GDP, far above the limits set by the Spaniard, who even stresses that “we must send a message of medium-term sustainability of economies”.
De Gidos (ECB): Public debt campaign in the Eurozone – What is its position for Greece
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