As countries in Europe are counting their losses from the COVID-19 pandemic, the European Commission on Wednesday proposed a 750-bln-euro (826 billion U.S. dollars) recovery fund to help the world‘s largest trading bloc recover from a recession.
The proposal which is deemed by European Commissioner for Economy Paolo Gentiloni as “a European turning point to face an unprecedented crisis,” follows an earlier initiative by France and Germany that asked for the EU’s executive arm to borrow 500 billion euros from the financial market before distributing them as grants to members.
The European Commission’s proposal echoed that initiative and added another 250 billion euros of further borrowing, which is intended to be loans to member states.
Whether the proposal from Brussels will be heeded by member states remains to be seen. The French-German initiative faced push back from the so-called frugal four — Austria, Denmark, the Netherlands and Sweden — which called for loans, rather than grants, to member states.
Portuguese Prime Minister Antonio Costa, on the other hand, welcomed the proposal as “ambitious”, saying it’s “up to the challenge that Europe faces,” and “opens the door to the reunion of the European project with the Europeans.”
According to the lastest COVID-19 situation dashboard from the World Health Organization (WHO) European Region, a total of 2,064,675 confirmed cases have been reported in the Region as of Wednesday morning, with 176,279 deaths.
While the devastating human losses would be grieved long and hard, countries in Europe are already faced with the imminent economic losses wrecked by the coronavirus pandemic.
The European Central Bank (ECB) President Christine Lagarde said Wednesday that the 19-member euro area economy is likely to contract between 8 percent and 12 percent this year, more than the previous estimate of a 5-percent decline for a “mild scenario”.
“It’s very likely that we are somewhere between the medium and severe scenarios,” she said.
The German Institute for Economic Research (DIW Berlin) said on Wednesday that due to the effects of the lockdown measures, the country’s economic output in the second quarter (Q2) of 2020 is likely to decline by more than 10 percent compared to the first quarter.
For the entire year 2020, leading think tanks in Germany have predicted that the country’s economic output would fall by 4.2 percent.
France’s national statistics institute INSEE said the country’s economy is likely to contract by 20 percent in Q2 this year, deepening a recession in the eurozone’s second-largest power where the coronavirus crisis had prompted the worst post-war economic turmoil.
INSEE added that the French economy could contract 8 percent for the whole year of 2020 if activities return to the pre-crisis level by July.
However, “such a rapid return to normal seems unrealistic,” it noted.
The International Labour Organization (ILO) said in a report on Wednesday that more than one in six young people have stopped working since the onset of the COVID-19 pandemic while those who remain employed have seen their working hours cut by 23 percent.
In Finland, 433,100 unemployed jobseekers were registered at the employment authorities by the end of April, nearly doubled year-on-year, at an unemployment rate of 8.1 percent. (1 euro = 1.1 U.S. dollars)