EU Financial ministers of all 27 member states have agreed to a rescue package for European countries most badly affected by the COVID-19 pandemic of €500 billion.
This comes after long discussions that continued throughout Wednesday night between representatives of all members states. These were drawn up in response to the Managing Director of the International Monetary Fund (IMF) and Bulgarian economist, Kristalina Georgieva, who has warned that the world is facing the worst economic crisis since the Great Depression of the 1930s. Furthermore, the pandemic could turn economic growth ‘sharply negative’ this year, with estimates predicting that Italy could be set for a GDP contraction of 11%.
The main features of this ‘rescue package’ consist of a ‘European Stability Mechanism’. This is an EU bailout fund which will make €240 billion available to the countries most afflicted. Other measures include a €200 billion investment from the European Investment Bank (EIB) and a European Commission project for national short-time working schemes. The successful conclusion of the ‘rescue package’ is essential to the short-term stability and harmony of the organisation considering the EU has been roundly criticised for blindly stumbling through this crisis. This is especially after Mauro Ferrari, resigned as President of the European Research Council at the beginning of this month. Ferrari stated that he was ‘extremely disappointed by the European response’ and that he ‘had lost faith in the project’. Meanwhile, nations such as Italy, Spain and France have criticised nations that have been less afflicted, such as Germany and the Netherlands. Plus the European project has been criticised more generally for failing to show both sufficient leadership and solidarity on the matter. An unnamed diplomat has stated that ‘this has not been our finest moment. Our response has come late and has been marred by nationalism. Solidarity went out of the window with the first coronavirus victim’. There is little doubt this pandemic has exposed deep divisions in the EU with the scars afflicted by the organisation’s lack of solidarity likely to remain for many years to come. This has also provided useful ammunition to Eurosceptic Parties of Italy and Spain in the future.
The European Central Bank’s (ECB) has criticised the agreed package as being far too small, with the bloc needing up to €1.5 trillion to tackle the crisis according to the ECB’s estimates. However, French Finance Minister, Bruno Le Maire, hailed the agreement as the most important economic plan in EU history, later tweeting, ‘Europe has decided and is ready to meet the gravity of the crisis’. David Sassoli, the Italian president of the European Parliament tweeted, ‘Our faith in Europe has proven correct’!
Members and supporters of the European Union will be hoping this rescue package doesn’t prove too little, too late for a continent at the heart of this global health pandemic.