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Christine Lagarde said the economic recovery after the crisis will be “restrained” because households have decided to save instead of spend. She added that airlines and hotels across the European Union’s 19-country single currency bloc will suffer “irredeemable” damage. Speaking at an online business summit, Mrs Lagarde said: “The recovery is going to be a complicated matter, I would characterise it as sequential and restrained.

“The amount of household savings we have seen in the euro area – these savings were partly forced and they will go back up now that shops are open, but there is also some precautionary savings.”

In a dire warning for the hospitality and travel sectors, she added: “We are not going to return to the ex-ante status quo.

“We will not travel as much, so the airline industries, the hospitality industries, the entertainment industries are going to come out of this recovery process in a different shape and some will probably be hurt irredeemably.”

Ms Lagarde said global trade walk likely to be “significantly reduced” in the wake of the pandemic.

She added the ECB had “used all policy levers” to ensure that financing costs remained low for businesses, governments and households, and to ensure banks continued to lend money.

“We need to be extremely attentive to those that are most vulnerable,” she said.

The ECB has estimated that Gross Domestic Product in the Eurozone fell by 16 percent in the first two quarters of 2020.

But the Frankfurt-based central bank has forecast growth to pick up in the combining months as governments ease their coronavirus restrictions.

After an 8.7 percent slump for this year, the ECB has predicted a rebound of 5.2 percent in 2021 and 3.3 percent in 2022.

Ms Lagarde cast doubt over whether European leaders will be able to reach agreement over the bloc’s planned €750 billion recovery fund.

Under the plan, the European Commission would raise money on the international markets before dishing out €500 billion in grants and €250 billion in loans to pandemic-stricken regions and industries.

The ECB chief said she doesn’t believe there will be a final agreement when leaders hold face-to-face talks on July 17.

Ms Lagarde called on governments to prepare for a second wave of the virus that could pile extra misery on their already fragile economies.

She said: “We probably are past the lowest point and I say that with some trepidation because of course there could be a severe second wave.”

The ECB is on course to buy €1.3 trillion worth of bonds and lend a similar amount to banks at negative rates to cushion the Eurozone economy and avoid a credit crunch.

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