Guindos (ECB) warns of the risk of a wave of bankruptcies and calls for the gradual withdrawal of stimuli

The vice president of the European Central Bank (ECB), Luis de Guindos, warned this Saturday of the risk of a wave of corporate bankruptcies in Europe and called for a gradual withdrawal of the support measures that have prevented the increase in insolvency due to the pandemic so far.

“The main risk we identify for financial stability is a potential wave of insolvencies in the corporate sector, “de Guindos said at a press conference after participating today in the informal meeting of ministers of Economy and Finance of the European Union (EU) in Lisbon.

He added that “it is very important that the withdrawal of support measures be gradual, that in parallel to the evolution of the economy and more specific measures be put in place “to” avoid “the effects of their abrupt disappearance and, at the same time, the” zombification “of the corporate sector in Europe.

De Guindos insisted that, although the measures adopted by governments, such as credit moratoriums, have so far prevented this wave of bankruptcies from occurring, it is necessary to put “a note of caution” and monitor the evolution of bad loans.

The ratio of these credits – those that accumulate more than 90 days past due or are considered irrecoverable – fell in the EU to 2.6% in 2020 despite the pandemic, but could increase if with the withdrawal of aid in the heat of the incipient recovery corporate bankruptcies multiply.

At the informal meeting of ministers organized by Portugal, which this semester is chairing the EU council, the message came out that a premature withdrawal of fiscal and monetary support measures should be avoided and paced at the pace of a recovery that will be uneven across sectors .

The latest forecasts from the European Commission, more optimistic than expected a few months ago, suggest that the EU economy will gain momentum in the second half of the year and will grow by 4.2% this year and 4.4% next, from so its 27 states will have returned to their pre-pandemic level by the end of 2022.

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