Third, euro area countries established the European Financial Stability Facility (EFSF) to provide loans of up to a total of € billion to euro area countries in difficulty, subject to strong policy conditionality in the context of joint euro area-IMF programmes. On 15 June, the EFSF agreement entered into force and on 4 August the Facility was activated.
This makes it even harder to make a point forecast for economic activity because, to do so, you must analyze both the shock and the fiscal response and how they interact. You also need to distinguish between the economy’s output and its income. Another positive attribute of the fiscal response is that the wage subsidy helps maintain the connection between employees and their employers.