U.S. stimulus will cause ‘positive spillovers’ in Europe - ECB chief economist

CNBC reports that ECB Chief Economist Philip Lane said that the $1.9 trillion coronavirus relief package in the United States is a “significant engine for the world economy” and will have positive spillover effects in the eurozone.

The Organization for Economic Cooperation and Development estimated that the relief bill will add about 1 percentage point to global growth this year.

“There will be positive spillovers from the U.S., the fact that there is a significant stimulus in the U.S. will boost global GDP, will boost exports from the euro area,” ECB Chief Economist Philip Lane told CNBC.

“Of course, the initial impact was visible more in the financial market, but over time, as this stimulus gets rolled out, it will be a significant engine for the world economy,” Lane added.

European officials often come under criticism for not providing similar fiscal power to the United States. The 27 European nations, for example, agreed in July to implement a 750 billion euro ($895 billion) joint stimulus, but those funds have not yet been distributed.

“Given the nature of the U.S. you can have very large fiscal packages embodied in a single piece of legislation. As you know in the European situation we’ve a mix, we have 19 fiscal policies and then we have the joint fiscal action,” Lane said.