EU leaders will hold emergency talks to discuss a joint response to the coronavirus, as the bloc’s executive offered waivers to its fiscal and state subsidy rules to let states boost public spending.
The announcement of Tuesday’s teleconference came after Italy and France called for Europe-wide fiscal stimulus to counter the economic impact of the epidemic.
The spread of coronavirus from China across Asia, Europe and the Americas has caused huge disruption to business operations, global supply chains and economic activity. Analysts say the world economy is headed for a sharp downturn, or even a recession.
“Following consultations I will hold a EUCO members conference call shortly on Covid-19 to coordinate EU efforts,” Charles Michel, who chairs EU summits, said on Twitter on Monday. “We need to cooperate in order to protect the health of our citizens.”
Separately, the head of the European Commission Ursula von der Leyen said on Monday the EU executive was considering all options to help the economy. The commission was assessing conditions to grant more flexibility to states in providing public subsidies to crisis-hit sectors, she added.
Temporary suspensions to the bloc’s state aid framework, which is meant to avoid unfair competition within the European market, were introduced after the 2008-09 global financial crisis and allowed governments to spend hundreds of billions of euros to bail out banks.
On Saturday, Brussels effectively authorized under its fiscal rules Italy’s emergency measures to tackle the impact of the outbreak on the economy. That flexibility will allow Italy, so far the EU country worst hit by the virus, to increase its budget deficit above EU limits.
Von der Leyen said the EU could also spend some of its own money to combat the economic crisis caused by the coronavirus, but admitted resources were scarce.
“If I look at the tasks ahead of us, we are running short of the flexibility to act in crises as we see them right now,” she said.
As she spoke, EU institutions and other international Brussels-based bodies were making arrangements for staff to work from home.
The EU Parliament was considering whether to call off its monthly plenary session. The EU council, which hosts meetings of national diplomats and ministers, last week sent home more than 50 people after two cases of coronavirus among its staff. [Reuters]