Euro zone business growth hits record high

LONDON: Euro zone business growth accelerated at its fastest pace in over three years in May, a survey showed yesterday, but European Central Bank President Christine Lagarde said an uncertain recovery still needed emergency support from the ECB.

After a slow start to vaccinations the pace is picking up, allowing some restrictions imposed to quell the spread of the coronavirus to be lifted, and a strong resurgence in the bloc’s now-reopening service industry added to the impetus from a booming manufacturing sector.

As the economy rebounds and confidence improves, some policymakers are making the case for the ECB to start giving up its emergency measures and revert to more traditional forms of stimulus.

But others are more cautious, warning the fledgling recovery is predicated on copious ECB support and that a recent rise in borrowing costs to two-year highs is already a major drag.

“We are committed to preserving favourable financing conditions. It’s far too early and it’s actually unnecessary to debate longer-term issues,” Lagarde said yesterday.

“I have repeatedly said that policymakers needed to provide the right bridge across the pandemic, well into the recovery, so we can actually deliver on our mandate.”

Alongside that, euro zone finance ministers will continue to support their economies but were upbeat yesterday about prospects for the post-pandemic recovery.




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