FRANKFURT (Reuters) – Euro zone governments must keep spending heavily to keep unemployment down and bolster confidence while the bloc recovers from an historic recession, European Central Bank President Christine Lagarde said on Sunday.
“Confidence in the private sector rests to a very large extent on confidence in fiscal policies,” Lagarde said in a speech. “Continued expansionary fiscal policies are vital to avoid excessive job shedding and support household incomes until the economic recovery is more robust.”
“Keeping job support schemes in place is critical to avoid a sharp increase in unemployment later in the year,” she added in the speech at the Annual Meeting of the Council of Governors of the Arab Central Banks and Monetary Authorities.
(Reporting by Balazs Koranyi; Editing by Susan Fenton)
