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The EU response to the crisis and the challenge of coordination

COVID-19 is spreading through Europe: the EU and neighbouring countries have recorded more than 600,000 cases of COVID-19 at this stage (as of 9. April), according to the European Centre for Disease Prevention and Control. Officials have reported more than 51,000 deaths, most of them in Italy and Spain.

While the pandemic is spreading through Europe, where most governments introduced lockdown measures, one may ask what is the EU doing to tackle this crisis? It is not easy to get a 100% complete answer as in the last month many actions have been taken by different institutions, under the coordination of the European Commission. Almost every day new EU initiatives are launched from the Commission, the Council, the Parliament, the European Central and Investment Banks.

This are the objectives of the actions of Commission President Ursula von der Leyen and her response team:

  • Ensuring the adequate supply of protective equipment and medical supplies across Europe;
  • Cushioning the blow for people’s livelihoods and the economy by applying full flexibility of EU fiscal rules;
  • Provide liquidity to small businesses and the health care sector;
  • Providing coherent guidelines to Member States on border measures to protect citizens’ health while allowing the free flow of essential goods;
  • Restricting temporarily non-essential travel to the European Union.

The several initiatives addressed thus the EU healthcare sector, the rules on borders and mobility, economy, research, and fighting disinformation.

The economic measures include the Coronavirus Response Investment Initiative, mobilising available cash reserves in the European Structural and Investments Funds, to fight the crisis immediately. It will direct €37 billion of unspent pre-financing for the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF) and the European Maritime and Fisheries Fund (EMFF).

This will be complemented by SURE which will provide financial assistance to Member States to support short-time work schemes and similar measures helping the protection jobs and thus employees and self-employed against the risk of unemployment and loss of income.

The scope of the EU Solidarity Fund, created in 2002 to provide financial assistance to EU member states dealing with natural disasters, was enlarged and now it can cover major public health crises. The hardest hit member states will get access to financial support of up to €800 million in 2020. Support will be decided on a case-by-case basis.

Other liquidity measures will help hard-hit small and medium-sized enterprises: the European Central Bank created a €800+ billion Pandemic Emergency Purchase Programme and the European Investment Bank unlocked €8 billion in finance for 100,000 small and medium-sized businesses.

After weeks of tension, also the Ministers of Finance, in the Eurogroup, found agreement on common measures. They agreed to safety nets for workers, businesses and public finances and in particular to establish Pandemic Crisis Support for the amount of 2% of member states’ GDP (close to €240b) as a safeguard for euro area Member States affected by this external shock.

In case you are lost in numbers, but still want to know more about these economic measures, the report of the European can give you a full overview of the economic policy measures taken until now.

What next? The Commission is working on the medium and long term, through Communication, expected for the end of this month, to set up a recovery strategy which will include a new proposal for the 2021-2027 Multiannual Financial Framework (MFF), the EU budget. This new MFF will amend the proposal of two years ago, that was under discussion.

For the moment, despite tensions, we can say that the EU did not stand still and is reacting. The response to the crisis requires close coordination between countries and is an area in which the EU has significant instruments and opportunities for action. This moment is also showing it is not easy to find agreements, but this is the best chance we have to quickly recover from this crisis.

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