The president of the European Central Bank has warned that the coronavirus outbreak will spark an economic downturn in Europe similar to the 2008 financial crash unless EU governments provide financial support for their economies.

Christine Lagarde held a call with EU leaders on Tuesday night to urge them to take action and raise spending in order to counter the economic effects of Covid-19, a source with knowledge of the matter told Bloomberg.

The eurozone’s central bank boss reportedly added that Europe would otherwise be at risk of a “scenario that will remind many of us of the 2008 Great Financial Crisis”. Lagarde said the ECB was considering all of its options before its meeting on Thursday, when it is widely expected to cut interest rates and expand its quantitative easing programme, according to Bloomberg.

Those options include monetary stimulus tools that would provide “super-cheap” funding for banks to make sure loans are readily available across the bloc and that cash continues to flow through the EU economy.

However, she warned that the policy tools would only work if they had full backing from EU governments. She said leaders needed to ensure banks continued lending to businesses affected by the virus outbreak, and ramp up their own fiscal stimulus measures. Lagarde added that the economic shock could be temporary if met with the right response.

The ECB president reportedly commended the actions of some countries but said more needed to be done. She said the damage was likely to spread to other countries and that without bold action, leaders were increasing the risk of “the collapse of part of your economies”.

The ECB declined to comment.

The Bank of England announced an emergency interest rate cut on Wednesday morning in response to the coronavirus threat.

The UK’s central bank also unveiled a term funding scheme that could provide more than £100bn worth of cheap loans to companies, including small and medium-sized businesses, which are struggling to cope with the impact of the outbreak.

European banks have called for similar relief measures. In a letter to the ECB, the European Commission and the European Banking Authority, the European Banking Federation lobby group called for looser lending rules and lower capital requirements that would give banks more room to support struggling customers.

“EBF banks ask regulators and supervisors for assistance to be able to work constructively with borrowers and other customers in affected communities, which will require flexibility to stem the regulatory-enforced barriers to finance borrowers in temporary struggle,” the letter said.

The EBF represents 3,500 banks across Europe, including the UK.