The EU Finance Ministers have approved a 540-billion-Euro stimulus package to combat the corona virus has caused economic damage. The of the pandemic, the worst affected are members of the common measures, however, are dissatisfied.
Further liquidity injections likely, as the crisis continues to demand its toll of the economies.
The of the EU Finance Ministers agreed economic stimulus package should support an unprecedented use of the European stability mechanism, the short-term job creation and loan guarantees from the European investment Bank. In addition, a recovery was proposed Fund for the promotion of the recovery phase, but not yet elaborated in Detail.
European economic recovery package shows a split Union
According to the stimulus efforts of various national governments, the European Union itself has just announced its own aid package. After failed attempts earlier this week, the representatives of the financial world have said last night, finally, with 540 billion euros, the impact of which mitigate what many see as an inevitable and brutal recession.
The most significant of the new measures is a relaxation of the rules on the European stability mechanism (ESM). The member States can make use of the 240-billion-Euro funds, almost unconditionally.
Prior to the Amendment of the EU were members of a reform package under the throw, before they were able to draw on the ESM funds.
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In addition, 100 billion Euro are earmarked for a new short-term work program of the European Commission. Under the name SURE known means of support in the majority of member States have already implemented programs.
Finally, a further 200 billion euros will go to the European investment Bank. These funds are intended to serve as guarantees for loans to member States committed themselves to have.
Although the scope of the economic stimulus package is dramatic, it will not be included in all EU-countries. Pleas for additional assistance through a joint EU bond of the Spanish and Italian Ministers, both of which belong to the worst of the pandemic-affected Nations, were blocked by the richer Nations of the Union.
In a similar way it is managed, the stronger EU economies also, the use of means to limit, which have been provided only for health-related programs.
It is not the “end of the road”
The new measures will add to the 750-billion Euro pandemic emergency program, which was announced last month by the ECB, together with measures for the easing of collateral, which were not explained until a few days ago, in Detail.
The disagreement between the more prosperous EU countries, and the Virus in the worst affected countries of the South, as well as the fact that the “Recovery Fund” is not yet complete, make it virtually certain that additional liquidity will be pumped into the economy.
Finally, the full extent of the economic impact of the Coronavirus is still not known.
The head of the Europe practice of Eurasia group, Mujtaba Rahman, commented on the need for additional measures as follows:
“There are many substantial gaps in the agreement, which will show up later.”
In a similar way to Paolo Gentiloni, the European Economics Commissioner and former Italian Prime Minister said that this would not be the final economic response of the EU to the crisis:
“This is not the end of the road.”
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