European policymakers are welcoming US President Joe Biden’s stimulus, hoping that the $ 1.9 trillion package approved by US Congress in the middle of the week will also help revitalize the economy.
“Help is here,” Biden tweeted after voting for one of the largest spending bills in American history.
While the U.S. president had primarily Americans in mind in his tweets, Europeans had a spillover effect from a law passed just a year after the World Health Organization officially announced a global coronavirus pandemic. Are expected.
The Financial Times of the United Kingdom said the law was “almost as historic as the pandemic it was trying to deal with.” “The Biden project is also very important for the wider world economy,” the editorial board said.
File-President Joe Biden, accompanied by Vice President Kamala Harris, looks up after signing the American Rescue Plan, a coronavirus rescue package, in the White House’s Oval Office on March 11, 2021.
European investors are also showing their appreciation. Shares rose on Thursday after the House of Representatives passed Biden’s radical COVID-19 bailout bill. It aims to accelerate the country’s economic recovery.
Earlier this week, the Organization for Economic Co-operation and Development (OECD), based in Paris, upgraded its 2021 global economic forecast, largely due to vaccine deployments and US stimulus. Expected a surge in government spending to boost US domestic growth this year from 3.2% to 6.5%, saying it would benefit other economies, including Europe, as a result of rising US demand and trade. It was.
According to the OECD, global gross domestic product growth was 5.6 percent this year, more than 1 percent above the organization’s December forecast.
Christine Lagarde, head of the European Central Bank, praised the Biden bill (known as the American Rescue Plan) and spurred future growth by spending more quickly on European Union member states on Thursday. Called for economic reforms in order to spend. The EU passed a $ 857 billion stimulus package in 2020, but governments in most countries will not start raising money until later this year.
“The big difference between Biden’s stimulus, which is discussed, voted, signed by law, and checked by mail by the two homes, and our large-scale financial stimulus here in Europe, is a bit late between the two. That’s what she says. Said. “Next-generation EU [spending package] It is very important to stimulate the European economy from a financial perspective. “
However, in addition to the two major spending measures so far, the scale of the US stimulus package has been questioned. Fearing that this measure will overheat the US economy, it warns of inflation risk.
“Households are already estimated at 1.6 trillion due to the combination of the state’s large scale, stronger rebounds than last summer’s expectations, and what consumers don’t want or can’t do in the activities they normally want to do in the past. Sitting in excess dollar savings. Demand could skyrocket as restrictions are relaxed, according to Ryan Bourne, author of EconomicsInOne Virus and economist at the Cato Institute, a rebounderian study. Will be very large. Organization.
Jeremy Warner, a London Daily Telegraph business columnist, questioned the magnitude of the stimulus. “In addition to the previous two stimuli, both of which haven’t been fully utilized yet, it’s a huge amount-almost three times as big as the stimulus (former US President), Barack Obama’s financial crisis in Congress- It raises the question of whether the US economy really needs such a powerful additional shot. “
Some progressive American economists have also said that the stimulus “is afraid that it may cause a kind of inflationary pressure we have never seen, formerly former US President Bill Clinton, Larry Summers. A generation that has questioned the Biden package, including the Treasury Secretary and former president Barack Obama’s former adviser, affecting the value of the dollar and financial stability. “
Biden officials say the biggest fear when designing a package was not overdoing, but overdoing. They claim that Washington’s response to the 2008-09 financial crisis was inadequate and the stimulus was great because it didn’t want to repeat its mistakes. They say this stimulus will help the United States avoid being trapped in the low-growth economic dynamics that have trapped Europe and Japan since the financial crisis.
The Federal Reserve Board also dismissed concerns about runaway inflation as misguided and said it intends to stay vigilant and maintain low interest rates to curb inflation. Federal Reserve Board Chair Jerome Powell said the biggest risk was a temporary rise in prices.
Europe welcomes historic US stimuli, but some raise inflation concerns
Source link Europe welcomes historic US stimuli, but some raise inflation concerns