Coronavirus economic recovery: 'Now is the time to compromise'

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By Darren McCaffrey
Coronavirus economic recovery: 'Now is the time to compromise'
Copyright  Euronews   -   Euronews

As the shutters slowly rise on Europe’s economies, and the immediate health emergency eases, the focus turns to the continent's recovery.

And the picture is bleak. 

Forecasts for this year suggest the EU’s powerhouse, Germany, will see its economy slump by 6.5%, France 8.2%, Spain 9.4% and Italy 9.5%, though those in the east of Europe, like Poland, have fared better, down by 4.3%

Overall the EU is expected to be down a massive 7.4% this year.

In the face of this unprecedented recession, the bloc has struggled to come up with a long term recovery plan to deal with the scope and scale of the crisis. 

Divisions — particularly between northern and southern countries and the fiscal conservative member states and those that are heavily indebted — remain strong.

“No one is to blame for this crisis, no country is to blame for this crisis, this is something we could not control, and it has affected so many member states in such a significant manner, so at this moment we need a coordinated and a solidarity response, so we could take away these divisions and we should start delivering on the responses to the crisis," said Portuguese MEP Pedro Marques.

Step forward Emmanuel Macron and Angela Merkel who have come up with their compromise plan: a €500 billion EU recovery fund, raised by the European Commission borrowing on capital markets.  Essentially it's shared debt.

A big move but one that is too much for some, notably countries like the Netherlands and Austria who have come up with their own plan, with demands for continuing reform.

“They have their point of view, they have always been clear about that point of view, there are other countries who are vehemently against these arguments of the Nordics," said Belgium's ex-finance minister, Johan Van Overtveldt. 

"But it is a question of trying to find a compromise between those two positions, it does not help to keep on shouting at each other, that you are right and I am wrong, vice-versa, the compromise time has come now.”

Ultimately it will be up to Charles Michel, the European Council's president, to bang heads together. But, at the moment, the German-Franco plan seems like the best bet.

“Something like this needs to go over the line, whether it will be this or some other guarantees or something that looks like the borrowing facilities we saw in previous financial crises, a lot of technical solutions are possible," says Rebecca Christie, visiting fellow at Bruegel. "What’s missing is the political will once that comes together, the technical solutions will fall into place.”

Brussels was accused of being too slow to react when this crisis hit. It can’t afford not to lead the recovery.