After closing their external borders to help slow the spread of coronavirus, European countries are now scrambling to reduce the economic fallout of COVID-19, even as experts say more needs to be done.
Rescue packages and fiscal stimulus measures — even the possibility in France of nationalizing some struggling companies—European governments are looking for ways to calm coronavirus-spooked businesses and citizens.
Analysts said the European Union’s second-largest economy, France, is taking the most dramatic steps so far. Addressing the nation this week, French President Emmanuel Macron said no company would risk collapse. His government has announced a roughly $50-billion financial relief package, along with another 300 million in loans for small businesses.
And while most of France is in lockdown, with people only allowed to go out for key necessities, French Economy Minister Bruno Le Maire urged companies and workers allowed to keep running to show up for work. He has also not ruled out nationalizing some strategic companies, if needed, to save them.
Europe’s largest economy, Germany, promised a so-called “bazooka” of measures, including at least 550 billion dollars in loan guarantees for its companies. Spain has announced a 220 billion-dollar financial rescue package. Italy, Europe’s hardest-hit country so far, has announced a 27 billion-dollar rescue package for businesses an individuals—which analysts say is not enough.
The EU’s internal market Commissioner Thierry Breton told BFM TV the coronavirus pandemic will push the EU into a recession this year, hitting the bloc’s economy by up to 2.5%. He said world governments must work together to find solutions.
That was also the message from European Commission chief Ursula von der Leyen, who noted coronavirus lockdowns and other health measures were battering the bloc's economy.
"Now we have to do our utmost to protect our people and to protect our economies.," she said.
The Commission is looking for ways to ease cross border trade, but the bloc has yet to agree on a joint economic plan.
The European Central Bank, or ECB, did announce some new stimulus measures last week, but did not lower interest rates. Similarly, members of the eurozone currency union have yet to come up with the “very large policy response” that Eurogroup head Mario Centeno is promising.
Analyst Gunther Wolff of the Brussels-based Bruegel think tank says now is the time for the ECB and eurogroup to be bold, and announce big fiscal and monetary measures. He says they are technically, physically and economically feasible, and they are needed. But, he adds, it is unclear whether they will be politically acceptable.