EU coronavirus warning: All members facing threat of ‘very deep recession’ due to outbreak
The coronavirus pandemic’s economic risk to the whole of the European Union with would be a “bigger shock” than the deep setback of the 2008 eurozone crisis. Former Greek Financial Minister Giorgos Papakonstantinou warned Brussels all members could be dragged into a “very deep recession” unless the bloc adopts strong emergency policies to safeguard the economies of the EU27. Speaking to CNBC, Mr Papakonstantinou said: “It’s important to realise that this is a bigger shock than the eurozone crisis.
“It’s symmetric, it hits everyone, it hits most sectors. The sudden shock is not just confined to a few sectors, it hits all over the economy and it hits the entire eurozone and indeed the entire EU.
“It’s extremely likely that you will have most EU countries and eurozone countries having a very deep recession.
“You won’t just have Greece going to minus 8, minus 9 percent as it did in 201, you have a lot of EU countries, perhaps the entire eurozone, going to this kind of numbers.”
The Greek economist insisted the threat produced by the coronavirus pandemic is without precedent as he warned the risks could push members states into adopting a unilateral approach resulting in a split among the EU27.
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Mr Papakonstantinou continued: “This is not something we have seen before, everyone being in this difficult situation and not just a few countries having a problem. Therefore, it’s a challenge of proportions we have not seen before.
“National governments are attempting to mitigate the impact with a host of measures. The problem is that some can afford it and some cannot.
“Germany’s unlimited guarantees to companies is not something every other country can do.”
He added: “So the question arises, how can we face this in a way where everyone comes out stronger at the other end or, at least, with as minimal an economic damage as possible.
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“Here the ECB has bought us all some time with it’s €750 billion pandemic emergency purchase of securities which is, in fact, more than €1 trillion if you count the announcements previously made but that’s not going to be enough.
“There needs to be a European response.”
Nine member states, including Italy and France, demanded fellow European Union member states agree to the issuing of temporary joint debt – the so-called ‘corona bonds.”
However, The Netherlands and Germany have both voiced their scepticism at the proposal and insisted now is not the time for new measures.
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Former Italian Prime Minister Enrico Letta told Dutch newspaper De Volkskrant: “The image Italians have of the Netherlands has been drastically polluted in just a few days.
“And not just in Italy. Look at the reaction in Portugal and Spain. They are surprised, severely disappointed reactions.
“Nobody expected that the Netherlands, one of the founders of the European Union, would behave like this at just such a moment.”
Dutch MEP Sophie in ’t Veld warned her Government they are “playing with fire”: “The Netherlands, like many other governments, enjoys that feeling of ‘We’re a little bit stubborn.’
“But it is becoming clear that they are playing with fire, because if Italy falls, then the eurozone and EU falls and then we fall as well.”
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