EU ready to loosen purse strings as coronavirus bites economy
Reuters
Published Mar 02, 2020 10:13AM ET
By Francesco Guarascio
BRUSSELS (Reuters) - The European Union is considering measures to protect its economy against the impact of the coronavirus outbreak, top officials said on Monday, as health risks in Europe were raised to high after the virus spread to most countries in the bloc.
About 2,100 cases of coronavirus infections have been confirmed across 18 of the 27 EU states and 38 EU citizens have died, according to figures released on Monday by the European Commission, the EU's executive.
The sudden outbreak of the disease in Europe since mid-February is pushing EU states to coordinate economic and health responses. It had previously been concentrated in China where emerged in December.
"The EU is ready to use all the available policy options if and when needed to safeguard our growth," EU economics commissioner Paolo Gentiloni told a news conference, saying risks threatened by the outbreak had now materialized.
He listed transport, tourism and carmakers among the sectors most affected.
European Central Bank Vice President Luis de Guindos said the ECB is also ready to help but that governments should be the first line of defense.
"Fiscal policy should be the main instrument that is used in response to this situation," de Guindos said. "Our reaction has to be calm ... and prudent."
In an extraordinary conference call on Wednesday, EU finance ministers will discuss immediate actions taken at national level to reduce risks of an economic crisis, Gentiloni said, including public support for healthcare and short-term liquidity measures.
The teleconference will also prepare the ground for a possible "coordinated fiscal response" to be decided in March by European finance ministers. That could involve extraordinary measures similar to those adopted to combat the 2008 global financial crisis, Gentiloni said, without giving more details.
Then, the EU introduced temporary exceptions to rules on state subsidies which allowed member countries to support their economies more freely.
In February, the EU's economic powerhouse Germany dropped its traditional opposition to more investments at euro zone level as concerns about a slowdown grew.
In a further sign that the EU is adopting a more lenient approach to fiscal policy, Gentiloni praised measures announced by the Italian government to help its economy withstand Europe's largest outbreak of coronavirus.
He described as "proportionate" the package of measures worth 3.6 billion euros ($3.5 billion) announced on Sunday by Finance Minister Roberto Gualtieri, even though it will further inflate Italy's budget deficit.
HEALTH, BORDERS
At the same news conference, European Commission President Ursula von der Leyen, said the EU's disease prevention agency ECDC had raised its assessment of coronavirus risks "from moderate to high" in the EU.
Get The News You Want
"In other words, the virus continues to spread," she told reporters.
To coordinate the EU reaction to the outbreak, EU health ministers will gather in Brussels on Friday for an extraordinary meeting, the second this year to address the coronavirus crisis.
The health council could be held in parallel with an extraordinary meeting of EU migration ministers, an EU official said.
EU experts have so far agreed that turning people potentially infected with the virus back at borders could help spread the disease, but this position is subject to weekly reviews.
Closing Schengen's internal borders on health grounds would be unprecedented.
Speaking in London, de Guindos said China's measures to combat the outbreak could affect euro area exports and may cause disruptions in global supply chains. Services could also be affected, particularly by travel disruptions, he added.
Asked about the potential for an ECB rate cut, he echoed other ECB rate setters who have said it is too early for the central bank to act.
"We should not get confused. We are not almighty, we do not have the philosopher's stone," De Guindos said.
(This story corrects number of EU cases to 2,100 from 21,000)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.