ECB’s de Cos: Economic Impact to Follow Covid-19 Vaccination With Lag

12 January 2021

By David Barwick – FRANKFURT (Econostream) – The lag between the vaccination of the public against Covid-19 and the positive economic impact of increasingly widespread immunity implies leaving policy support in place, European Central Bank Governing Council member Pablo Hernandez de Cos said Tuesday.

According to a text provided by the Bank of Spain, which he heads, De Cos said in a speech to the Cercle d’Economia that ‘[w]ith the horizon provided by the availability of vaccines, and even taking into account that the economic effects of their distribution will take time to be perceived in the economy - which will require the maintenance of exceptional measures for a time - it is important to face, in parallel, the medium-term challenges of our economy.’

It cannot yet be determined how long changes caused by the pandemic will last, he said. ‘However, some of the changes that are taking place are already perceived as structural, such as those derived from deepening the process of digitisation and the impact on productivity’, he said.

Potential damage from the pandemic includes higher unemployment and economic inequality as well as higher public debt, he said.

‘Therefore, the extraordinarily complex scenario that is drawn as a consequence of the pandemic makes it even more necessary, if possible, to define a reform agenda of ambitious structural reforms’, he said.

De Cos urged keeping in mind ‘the need to design a strategy to clean up the public finances to be gradually implemented once the pandemic crisis is over.’