France Calls on Euro Area to Be Ready to Use Fiscal Stimulus

(Bloomberg) --

French Finance Minister Bruno Le Maire says euro-area finance ministers must prepare fiscal stimulus to use if the economic situation deteriorates in the coming weeks due to the coronavirus outbreak.

Finance ministers from the euro area will hold an emergency teleconference later Wednesday to discuss how to respond to the economic disruption. Le Maire said that in the case of France, the hit will be greater than the 0.1 percentage point he forecast last month.

“I want the 19 finance ministers of the euro area to agree that if at some point we see that growth takes a long-lasting and significant hit, we are ready to use all instruments including fiscal instruments,” Le Maire said on BFM Business TV. “We need to prepare.”

The French minister said the European Central Bank could also help with measures to boost bank lending to small, struggling companies. But the main response should now be fiscal, he said.

“Monetary policy is not the best weapon today. Rates are already low, and that’s particularly true for the ECB,” Le Maire said. “The fiscal instrument is more effective than the monetary instrument today.”

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Geraldine Amiel, James Regan

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