Intereconomics

Forum

The European Response to the Coronavirus Crisis

On 11 March 2020, the World Health Organization declared the novel coronavirus outbreak a global pandemic. Ill-prepared and reluctant to halt economic activities, EU member states were slow to react to contain the spread of the virus. Only as numbers began to rise worldwide and Italy sounded the alarm and instituted a mandatory quarantine, did European leaders begin to follow suit, albeit without any coordination with their neighbours. Although necessary, the lockdown measures came at a heavy price.

In this Forum, László Andor, Andreas Backhaus, Alessandro Bramucci, Armanda Cetrulo, Paul De Grauwe, Sebastian Dullien, Dario Guarascio, Bodo Herzog, Sébastien Jean, Franz Prante, Christian Proaño, Thomas Theobald, Silke Tober, Achim Truger, Maria Enrica Virgillito and Andrew Watt consider various aspects of the necessary response. Member state governments and the European Commission must coordinate broad discussions and implement of assistance measures while also considering innovative ways to move forward post-pandemic. The future of the EU may depend on their response.

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The Covid-19 Response

The Economics of the Coronavirus Crisis

Intereconomics will be publishing all coronavirus crisis related articles online first in order to provide our readers up-to-date information as this unprecedented situation continues to unfold.

Fighting the COVID-19 Crisis: Debt Monetisation and EU Recovery Bonds by Alberto Botta, Eugenio Caverzasi and Alberto Russo

State Aid Policies in Response to the COVID-19 Shock: Observations and Guiding Principles by Massimo Motta and Martin Peitz

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Editorial

The Coronavirus Crisis and European Integration

The coronavirus crisis illustrated the fragility of European common goods like the single market and the Schengen agreement and even the Economic and Monetary Union if national measures are incompatible or insufficiently coordinated. Annette Bongardt and Francisco Torres contend that the EU needs address the economic consequences of the current pandemic crisis through its eurozone framework, promote the shift to sustainable production and consumption patterns for the benefit of public health, the environment and sustainable development and not waste resources on Brexit.

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Forum

SURE: Protecting Jobs From the Pandemic

Once it was clear that economic and social activities had to cease in order to slow the spread of the coronavirus epidemic, the risk of rapidly rising unemployment became apparent. In response, the European Commission proposed the creation of a European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE). This bold and innovative move will make financial support available in the form of loans to hard hit member states through short-time work schemes or similar measures. "While structural interventions like SURE can be important, they are not substitutes for the appropriate macroeconomic policies that have to be in place to ensure the fastest possible recovery", writes László Andor.

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Letter from America

Europe Is Once Again Forged in a Crisis

To American economist Barry Eichengreen, the debate around how the European Union should respond to the COVID-19 crisis has a familiar ring. Europe has been debating debt mutualization, transfer union and fiscal federalism for years, he notes. These echoing themes remind us of Jean Monnet’s observation that Europe is forged in crises. And the coronavirus pandemic is no different.

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Forum

Coronabonds

The coronavirus crisis has made the euro area vulnerable to a replay of the sovereign debt crisis of the beginning of the past decade, write Sebastian Dullien, Thomas Theobald, Silke Tober and Andrew Watt. While the European Council has so far failed to come up with a decisive solution that breathes European solidarity and presents a common front, the ECB is being relied upon to do the heavy lifting. The European Commission and the heads of state and government need tackle the serious threat to the integration project, the authors argue, and endow the EU with tools to stabilise the economy in the current and future crises and to address longer-term challenges.

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