Eurozone: Grants vs. loans – Deutsche Bank

European leaders won’t be able to afford a lie down anytime soon as there is still much unfinished business to sort out post the leaders’ summit yesterday, per Deutsche Bank.

Key quotes

“While we wasn’t expecting a full agreement on the EU recovery Fund yesterday, the progress was slower than feared. We remain confident there will be a Recovery Fund, but beyond that, the size, speed and structure remains undecided and unclear.” 

“What is clear is that the key battleground won’t be ‘joint bonds’. It will be the ratio of grants vs loans.” 

“During these deliberations, Bloomberg reported that ECB President Lagarde had warned that the Euro Area economy could shrink by 15% this year in an extreme scenario, with her baseline scenario a 9% drop in output. Furthermore, she said that the leaders risked doing too little, too late in terms of their response.”