ECB’s Villeroy: Delta Will Only Have ‘Indirect’ Impact on French Growth
26 August 2021
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said Thursday that the Delta variant of the coronavirus would only have an ‘indirect’ effect on French economic growth.
In a speech posted to the website of Banque de France, which he heads, Villeroy, apparently speaking to a French business audience, said that given somewhat better-than-expected growth in the first half of the year, ‘we still firmly believe in cumulative growth of 10% over 2021-2022, for France as well as for the Eurozone.’
French businesses had adapted to the virus and was thus resilient in the face of variants, he said. ‘The effect of the Delta variant would only be indirect, through the lower growth of Asia and indeed the United States’, he said.
‘You can also count on the ECB and our monetary policy to remain supportive’, he said.
Supply constraints would only temporarily boost inflation more than expected, he said, but difficulties finding workers would more lastingly hinder French economic activity.
‘[T]he positive side is the exceptional job creation over the past year’, he said. ‘But the negative side is that we are back to the speed limit of the French economy, too fast after the Covid crisis.’
The most needed reforms are those that would boost the labour supply, he said.
Villeroy complained that ‘[t]he American economy is accelerating thanks to digital technology, while the European and French economy is suffering from its excessive concentration on aeronautics and tourism.’ Europe must succeed in ‘the two revolutions of the 2020s: the digital revolution (Europe is lagging behind), and the ecological revolution (Europe has a chance to be ahead)', he said.