Europe risks losing 15 million jobs if new economic support isn't approved, IMF says

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Waitress Josephine Madinier waits for take away orders at Miss Banh-Mi restaurant in Paris' 2nd Arrondissement on February 1, 2021, in Paris, France.Europe could lose 15 million jobs without the approval of new equity support, the IMF said Tuesday.A mix of public and private support worth around 2% to 3% of GDP would fill the economic hole, the IMF said.

Action from the public and private sectors is needed to extend a critical bridge for European firms, the organization said. Committing about 2% to 3% of GDP to equity support can ensure robust firms will avoid insolvency until the broader economy rebounds, the IMF added. New support should solely focus on businesses that were solvent before the pandemic, they added. While public support is estimated to have addressed 60% of firms' liquidity problems, the proportion of insolvent businesses is expected to have grown by six percentage points through the health crisis.

Banks can then fill in the gaps. Private firms know their clients and their business plans best, and incentivizing private investors to lend a hand helps avoid the moral hazard associated with public support, the IMF said.

Source: News Formal (newsformal.com)

 

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