Coronavirus: EU seeks response to financial disaster – World



European states will try Thursday during a videoconference to find a common response to pull the economy from the doldrums caused by the Covid-19 epidemic, but their efforts are hampered by their divisions.

Hundreds of millions of European citizens are now locked in their homes, with the aim of slowing down the pandemic, which has already killed more than 10,000 people in the EU, mainly in Italy, Spain and France. This confinement has had disastrous consequences for the economy: companies shutdown, stock markets in the red and dramatic growth forecasts.

European leaders have, from the start of the crisis, favored national responses, in particular by unveiling important spending plans, without seeking to coordinate at European level.

For two weeks, Brussels has been trying, not without difficulty, to harmonize a European approach, in particular via weekly meetings by videoconference to reconcile divided European leaders.

Draft declaration

According to the draft declaration that they must approve this evening, the heads of state and government should validate the suspension of European rules of budgetary discipline, which will allow them to spend as much as necessary to fight against the virus and its consequences.

They should also instruct the Commission to work on an “exit strategy” from the crisis and a recovery plan for the economy once the epidemic has passed.

Financial solidarity

Nine European leaders, including Frenchman Emmanuel Macron and Italian Giuseppe Conte, launched on Wednesday a call for greater financial solidarity in the EU. In a letter to the President of the European Council, Charles Michel, they urge “to work on an instrument” to launch a loan common to the entire euro zone, seeing it as the foundation of a more united and respected European economy.

However, this proposal has already been swept behind the scenes by Germany, the Netherlands and other northern European countries, who deem it “ideological” and inappropriate while the health crisis is still in full swing.

Pooling debts would facilitate borrowing from the southern states, less virtuous in terms of public finances, but the northern countries have always refused this idea, which would lead them to pay for countries they deem lax.

“Corona bonds”

Last week, during the last European videoconference summit, Mr. Conte, supported by Emmanuel Macron, had already suggested the creation of “corona bonds”, bonds that would pool the debts of the 19 countries of the euro zone.

Rather than these “corona bonds”, the 27 should, according to the draft conclusions, invite their ministers to continue working on how to support the economy, but without any other details.

Among the possible avenues, recourse to the euro zone relief fund, the European Stability Mechanism (ESM), which could grant a precautionary credit line to a country, a group of countries, or even to all countries from the eurozone who request it.

In principle, this money would not be used but would give a reassuring signal to the markets: in the event of a problem, the country concerned could theoretically have recourse to it.
Thursday’s summit will also take stock of measures taken across the Union to promote research into a vaccine.

Stock of medical equipment

The 27 must also approve measures such as the constitution of an emergency stock of medical equipment, as well as the relaxation of border closings between Member States.

Europe has become the heart of the pandemic, the number of deaths in Italy and Spain having exceeded that of China, where the disease first appeared. (dpa / nxp)

Created: 26.03.2020, 4:17 p.m.


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