Finally, Thursday night, they agreed to a plan worth more than half a trillion Euros, meant to ease the impact of the Coronavirus.
The Netherlands, which initially vetoed every proposition, finally agreed with the others, although limiting and controlling the way countries will use the money.
The package includes a €100 billion loan for unemployment benefits, access to €240 billion in loans for Eurozone countries to draw on from the fund, and €200 billion in loans for smaller businesses.
The stimulus package has been sorted out but the joint bonds (corona-bonds) talks have produced no conclusion, regardless of the pleas made by Spain and Italy, two of the most affected countries by the virus. On top of that, the bailout funds can only be used in health-related programs. Of course, the failure of helping the most affected members can hurt the overall Eurozone relations, and cast a dark cloud over the unity and togetherness of the Union.
Some analysts think that the size and impact of the current crisis can make the bloc change its opinion. If the Eurozone accepts and implements the common bonds, it can quickly turn into the United States of Europe. The Eurozone members should keep in mind that debt was one of the reasons why the United States became the United States. But this cannot happen if there isn't unanimity on the vote.
Italy’s Prime Minister, Giuseppe Conte, pledged for joined debt issuance and easier access to the Eurozone bailout fund so that he can support his country’s recovery, but the council denied both.
The future doesn’t look too bright for Italy, Spain, and Germany. UniCredit sees a 15% recession. In Germany’s case, institutes predicted for the second quarter of 2020 a 10% recession.
What is at stake here is not only the citizen's health and economic stability but also the recovery of Europe's wealthiest nations.
Overall, the stimulus packages passed by the finance ministers and measures taken by each country are said to be useful. Goldman Sachs said in a note that the actions taken until now wouldn't be enough: "the severity of the COVID-19 shock means it is unlikely to be able to be borne at the national level given the high starting level of debt for some member countries."
EUR/GBP traded low at 0.8772.
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Sources: cnbc.com, nytimes.com, forexlive.com
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