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How has the EU responded to the economic crisis resulting from the coronavirus pandemic?

In partnership with The European Commission
How has the EU responded to the economic crisis resulting from the coronavirus pandemic?
Copyright euronews
Copyright euronews
By Efi KoutsokostaFanny Gauret
Published on Updated
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We ask Economy Commissioner Paolo Gentiloni if Europe is doing enough to avoid an economic crisis due to the coronavirus outbreak.

The economic fallout of the coronavirus pandemic has been unprecedented.

For the first time in history, the EU suspended its fiscal rules on public deficits and the European Central Bank launched a 750 billion euros stimulus package.

Since the outbreak of Covid-19 in Europe, and especially in the countries that are most affected, such as Italy and Spain, many companies had to shut down completely.

The loss of tourism

In Barcelona, one of the most visited cities in Europe, the impact of this sanitary crisis is visible.

Concern is growing over the economic consequences and the measures that will be taken at national and European level to protect businesses and jobs.

Tourism represents almost 13% of GDP and is one of the sectors which contributes most to the economy of the country.

This sector has been hit hard by this crisis.

Eric Basset, a restaurateur, had to put his 20 employees under technical unemployment:

"We don't know how customers will come back, we don't know if international tourism will continue to be there in Barcelona. What we really want is concrete, real support for our employees, for us, and to be able to reopen in good conditions, with a cash fund that allows us to relaunch the activity, day by day."

Thanks to the creation of a European fund and more flexible budgetary rules in Europe, the Spanish government will mobilize 200 billion euros, that’s 20% of its GDP, to support the country's economy.

In 65 years, Roberto Torregrosa, from the Catalan Association of Tourism (ACPT) and Guitart hotels Director, never closed this hotel. He hopes for fast and coordinated measures.

"Possibly we will be talking about making a billing of 50% of what we had planned. If we do not have efforts from the banks, from the government, from suppliers and customers, we will not be able to get out of this situation. We need the leaders of the countries of the Union to be firm and to dictate the same policies, a common policy," says Torregrosa.

96% of Spanish SMEs are significantly impacted by this crisis and up to almost 1.5 million jobs could be lost. Even if the European Central Bank announces that it will create liquidity thanks to an emergency plan of 750 billion euros, uncertainties remain.

"It is true that many measures have been discussed, but there are still none that have been undertaken, and we are afraid that when there is finally consensus, it will be too late to avoid a crisis that undoubtedly, from an economic point of view, it will be very strong," says Celia Ferrero, Vice-President of National Federation of Independent Workers (ATA).

"And in any case, there will be a great disappointment if there is no common and solidary response to this crisis, injecting the liquidity that it needs, and playing all the same game."

"Because there are many SMEs and independent workers, that without a doubt will be left behind."

We asked Economy Commissioner Paolo Gentiloni how the EU will support people and businesses facing this unprecedented crisis.

Efi Koutsokosta, Euronews:

All these efforts by member states to support their economies in this huge crisis also lead to extra debt burden. How should this debt burden be carried forward?

Paolo Gentiloni, EU Economy Commissioner:

My answer could be "trust the ECB" to make it simple because in fact, I think that the ECB and globally all central banks reacted in a very strong way and the pandemic purchase, an extraordinary programme from the ECB was very important in stabilizing markets and to avoid fragmentation, especially in the euro area. So, for the moment I think that this intervention is perfectly capable to keep the situation under control.

Efi Koutsokosta, Euronews:

Is it the right time for the issuing of coronabonds?

Paolo Gentiloni, EU Economy Commissioner:

Issuing of bonds in the financial markets is something that has to face the emergency. Now we have to share the commitments to these targets because it's not something that single countries, stronger or weaker economically, can afford alone.

Efi Koutsokosta, Euronews:

But is it the right moment for these coronabonds? And is a no from Germany or the Netherlands a no to solidarity for the weaker countries?

Paolo Gentiloni, EU Economy Commissioner

A no to solidarity at this moment will put in danger all our project [the EU project] and we will discuss the tools that are not only on the table, the possibility to use ESM, or the possibility to issue bonds, but there is the European Union budget, there is the possibility to strengthen the role of the European Investment Bank. I think on the table, the finance ministers will have a toolkit to build consensus on the measures necessary for the immediate future.

Efi Koutsokosta, Euronews:

There is already a discussion about what the world will look like after this coronavirus crisis. Do you think that the Treaties need to be reworked?

Paolo Gentiloni, EU Economy Commissioner

This is not a discussion for today. For sure we will have a stronger public intervention at a national level, the role of the state will be stronger than before and we should fight for a stronger healthcare system, a stronger commitment on the welfare state, but we also have to know that a stronger state role could also mean more attraction for authoritarian models coming both from outside and inside our Union and this could be a real danger for our world after the pandemic.

Journalist • Katy Dartford

Video editor • Nicolas Coquet

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