- The European Commission has acted quickly to cushion the blow to businesses and families from coronavirus.
- The EU has relaxed its fiscal rules to provide member states with maximum flexibility.
- Billions of euros have been made available for crisis response efforts and to maintain liquidity in the banking sector.
- Solidarity and unity will help the EU-27 weather this storm together.
Pandemics have plagued civilisations throughout human history. This one has spread at breakneck speed, creating a severe public health emergency and causing a shock to the European and global economies.
The coronavirus outbreak is having a profoundly negative impact on people’s livelihoods, on companies of all sizes and on economic growth. It carries many serious social consequences.
Across Europe, businesses are struggling. Some are fighting for their very survival. Many find themselves forced to shed staff or cut working hours, which in turn reduces worker incomes.
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Even if we manage to slow down the viral spread – as we all deeply wish – economic activity will need time to recover.
Many sectors are suffering. Transport and tourism, catering and retail were among the first to take the hit, but you can see the loss of business confidence across the board. Tens of millions of workers are affected.
These exceptional times require exceptional solidarity and support.
We are responding quickly to cushion the blow.
Our priorities are to ensure that Europe’s health systems have all the resources they need, in terms of materials and money; that affected companies have enough liquidity to stay afloat; and that workers and the self-employed have their jobs and incomes protected.
We are using the full flexibility of the EU’s fiscal rules to support national governments to act decisively to tackle the socio-economic impact. We have activated the General Escape clause in the Stability and Growth Pact, so that national authorities are free to do all they can to support their health systems, businesses and workers.
They are already doing a lot: on a national level, fiscal support measures now account for around 2.2% of EU-27 GDP. For liquidity support, they total 13.7% of EU GDP.
On health, we are focusing on getting medical equipment to where it is needed most, by procuring it jointly and keeping goods moving freely across the single market. We are also financing research to develop a vaccine.
Then, to keep our businesses afloat, the European Commission is working on all fronts to provide for immediate cash relief to those companies affected, and to make sure they retain productive capacity.
That means making full and flexible use of the EU budget to support businesses and workers, addressing the liquidity stress now being felt by small and medium-sized enterprises in particular.
Our Corona Response Investment Initiative is making €37 billion available for crisis response - healthcare systems, small- medium-sized enterprises (SMEs), workers and vulnerable parts of our economies – bolstered by another €28 billion in unallocated EU funds.
And we correspondingly amended the rules on structural funds so that national governments have flexibility in using them.
Then, with the help of EU budget guarantees, the European Investment Fund will be able to incentivise banks to provide liquidity. That should provide some €8 billion of financing to at least 100,000 SMEs and small mid-cap companies. And the European Investment Bank will free up a further €20 billion in working capital lending to SMEs.
Altogether, EU-level funding totals some €93 billion – and we are working to raise even more.
Existing debtors affected by the virus outbreak will be allowed ‘credit holidays’ to delay paying off loans and reduce the strain on finances.
There is more: we have activated a temporary framework on state aid - or national subsidies - to make sure that businesses, of whatever size, get the liquidity they need to keep operating and keep their workers in a job.
This could come in the form of direct grants, repayable advances or tax advantages; state guarantees for loans that companies take from banks; subsidised public loans for companies.
Banks play a vital role in supporting the real economy by providing liquidity to companies. The European Central Bank has taken significant action with its announcement of the Pandemic Emergency Purchase Programme. This temporary asset purchase programme of €750 billion will help to ensure all Member States can benefit from supportive financing conditions that will enable them to absorb this shock.
When it comes to people’s jobs, one thing that this pandemic demonstrates is the need for full European solidarity, along with a flexible but coordinated response.
We will now contribute to the EU finance ministers’ work on further measures to steer our economies through this storm. We will explore all the tools at our disposal and we will need full political buy-in for any future measures. We will also help develop a coordinated exit strategy to steer us on a path of economic recovery after the virus has peaked.
Above all, this is a matter of European solidarity, cooperation and unity.
We will continue to act decisively, and together, to weather the storm.