Unprecedented rescue programs are launched for companies and employees. The EU is also pulling levers that would have been unthinkable just a few weeks ago. But that's not the last word.
Brussels (AP) - In the fight against the economic consequences of the corona crisis, the European Union still wants to do more. The EU institutions examined ways to increase "firepower", said Eurogroup leader Mario Centeno before deliberations of the 27 EU countries.
The aim is to propose solutions to the heads of state and government for their video summit on Thursday. "With joint measures it can be possible to minimize the economic consequences of the Corona crisis," stressed Federal Finance Minister Olaf Scholz on Twitter about the talks with his EU colleagues.
In anticipation of a drastic economic downturn, the EU had already set some levers in motion in the past few days. "We act quickly," said Centeno in a video message. "In just one week, we have roughly doubled our fiscal measures to support the economy in the euro area."
Only on Monday did the EU member states temporarily suspend the European debt and deficit rules in order to get a free hand for aid programs. The EU Commission had also eased aid rules and mobilized billions from the EU budget. The European Central Bank, in turn, is countering the crisis with gigantic bond purchase programs.
Nevertheless, the Eurogroup discussed further measures on Tuesday evening. The next step seemed most likely to involve the ESM euro rescue fund in crisis aid. So-called precautionary credit lines for euro countries were considered. In contrast to Greece aid in the euro crisis, for example, this would not be linked to the demand for reform programs, but simply conditions for repayment.
13 leading economists also spoke in favor of this option. "Europe needs a common economic policy response to the corona crisis," said Marcel Fratzscher, President of the German Institute for Economic Research. A so-called Covid Credit Line would effectively reduce risks to the economic and financial stability of all EU countries. "This creates solidarity and limits the economic damage for all EU member countries." Fratzscher, however, expressed skepticism about the corona bonds currently under discussion.
In the group of euro countries, such jointly issued bonds are incapable of consensus. Germany also rejects them. "This would require a dramatically different set-up of the European Union," it said from circles of the Eurogroup. "I wouldn't count on Eurobonds any time soon." If the crisis worsens in the next few months, an increase in the ESM would be conceivable, it said. According to his boss Klaus Regling, the euro rescue package still has 410 billion euros in credit lines available. How much "firepower" could be increased is open.
Backing for further steps comes from the EU Commission. "We are ready to take and support further measures that build on the big steps that have already been taken," said Vice President Valdis Dombrovskis. EU Economic Commissioner Paolo Gentiloni told the Financial Times: "Consensus is growing daily that we have to use extraordinary means to counter the extraordinary crisis." Gentiloni himself is currently in quarantine due to the fact that one of his employees had shown symptoms of Covid 19.
