Third, the weakening in global demand, also in the context of tighter monetary policy in many major economies, and the worsening terms of trade will mean less support for the euro area economy. Fourth, uncertainty remains high and confidence is falling sharply. At the same time, the labour market has remained robust, supporting economic activity.
But the high level of debt will leave government finances vulnerable to future shocks and it will be important for the Government to provide a clear and credible return to much lower and sustainable deficit and debt positions. Third, the country’s ability to withstand the immediate impacts of the Covid-19 shock is partly a result of policy actions over the last decade.