- The pandemic led to unprecedented government support schemes and a rethinking of government investment. Now, the war in Ukraine has led to a broad rethinking of European defence spending and yet another push for an even faster green transition and energy independence.
- Also, we expect more government support schemes in the coming weeks and months to offset the adverse effects from high energy prices for consumers but also corporates.
- In the short run, policy will probably not be accommodative enough to avoid a marked slowdown or even recession. In the long run, it is likely to remain more expansionary, resulting in tough choices on burden sharing, spending rules or fiscal adjustment.
For further details see:
Eurozone: How Accommodative Will Fiscal Policy Get?