Spotlight: European countries act to withstand economic shocks due to COVID-19-Xinhua

Spotlight: European countries act to withstand economic shocks due to COVID-19

Source: Xinhua

Editor: huaxia

2020-03-12 13:37:14

BRUSSELS, March 12 (Xinhua) -- The European Union (EU) on Wednesday launched an investment initiative worth several billion euros to cushion the economic impact of COVID-19, while some members have acted in this regard for days.

Since the novel coronavirus has emerged in all 27 EU members after Cyprus reported its first two cases, the bloc has been ramping up responses.


Some EU states have taken actions to minimize the economic impact of coronavirus.

Italy, the hardest-hit EU member with more than 10,000 infections reported by Wednesday morning, has decided to extend its quarantine to the entire country.

Prime Minister Giuseppe Conte indicated Monday that the government would adopt a "massive shock therapy" as a sort of economic stimulus, in case the disease throws the country into a tailspin.

Last week, the Italian government pledged 7.5 billion euros (8.5 billion U.S. dollars) to overcome negative consequences of the epidemic.

Apart from Italy, Germany, with nearly 1,600 COVID-19 cases by Wednesday afternoon, is also bracing for economic shocks.

On Monday, Germany's governing parties of the conservative union CDU/CSU and the Social Democratic Party agreed on various measures to support the country's economy.

Expanding agreed investment paths and enabling new priorities, the coalition committee announced an "investment offensive" with an additional expenditure of 12.4 billion euros (14 billion dollars) until 2024 to offer liquidity support to affected German companies.

With the European Central Bank (ECB) to meet this week for its latest monetary policy decision, ECB President Christine Lagarde said that the central bank stands ready to "take appropriate and targeted measures, as necessary and commensurate with the underlying risks."


Following a video conference of the European Council on Tuesday evening, German Chancellor Angela Merkel promised that the European stability and growth pact would be handled "flexibly," which means that governments in the bloc could be allowed to stop cutting deficits and public debts and address the challenge at hand.

On Wednesday, the EU announced a response investment initiative of 25 billion euros (28.3 billion dollars) to support the economy.

Some European analysts believe that the ECB's monetary tools may have only a limited effect on the eurozone economy, as the coronavirus fear cuts not only capital liquidity, but also consumer demands. Therefore, some EU members, represented by France, have been calling for a coordinated massive plan of financial stimulus at the eurozone level.

France's Minister of Economy and Finance Bruno Le Maire said Monday that Europe needs "a strong, massive, coordinated response" to cope with the economic fallout due to the coronavirus.

"We must have general mobilization. We have to work on a recovery plan based on fiscal measures and budgetary measures, tax cuts, so that as soon as the epidemiological crisis is over, we can revive the economic machine," Le Maire told France Inter Radio recently.

"Giving the potential impact on growth including the disruption of supply chains, we will coordinate our responses and stand ready to use all appropriate policy tools to achieve strong, sustainable growth safeguard against further materialization of downside risks," said Eurogroup President Mario Centeno in a statement earlier this month.


However, the epidemic seems to alienate EU states, while some figures have been calling for solidarity.

After Germany banned the export of masks and other medical supplies, followed by France which decided to requisition all mask stocks and production, Belgian Health Minister Maggie De Block criticized the two neighbors, saying the restrictions violate the spirit of solidarity in the bloc.

Coincidentally, German customs authorities blocked the export of a truck loaded with 240,000 protective masks to Switzerland, while Swiss authorities said the move is a broader export ban on protective gear.

Both Switzerland and Belgium produce few masks.

EU health commissioner Stella Kyriakides said member states should make sure that protective equipment is available across the continent," saying "solidarity is the key."

French President Emmanuel Macron also told his European partners that "unity is strength," inviting them to "act together now."

"In order to face COVID-19 ... I call on our European partners to take urgent action to coordinate health measures, research efforts and our economic response," Macron tweeted Monday.


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