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Such is the magnitude of the economic crash in France, that the country is beginning to run out of historical references to compare the crisis that is looming due to the coronavirus epidemic. As announced by the Bank of France on Wednesday, the economy, the second largest in the euro area, fell 6% during the first quarter of 2020 as a result of the impact of the Covid-19 pandemic and the containment measures approved by the Elysium. And the account continues to get heavier: every fortnight of confinement, subtracts 1.5 points from GDP, the French banking institution has warned just 24 hours after the president, Emmanuel Macron, prepares to address the nation again and, in all probability, to announce a further extension of confinement. According to the Governor of France, Franois Villeroy de Galhau, this is the worst figure for GDP evolution since World War II and similar to that recorded during the protests of May 68. The Minister of Economy, Bruno Le Maire, has already compared the situation even with the Great Recession after the crack 1929. German GDP, meanwhile, will fall 4.2% in 2020 and everything points to a 10% collapse in the second quarter. The two great locomotives of the European Union are in recession.

As if more graphics were needed, the Bank of France recalls that in its latest quarterly GDP growth forecast for the first three months of the year, published just a month ago, the projection was for growth of 0.1%. But the impact on the activity of the containment measures leads us to strongly revise our estimate of the quarterly variation in GDP in the first quarter, around -6%, he adds. We must go back to the second quarter of 1968, marked by the events of the month of May, to find a quarterly decline in activity of the same magnitude, stresses the Bank of France in reference to the fall of 5.3 at that time % of GDP, before rebounding strongly, yes, to 8%, in the third quarter of that year.

The problem is that this new crisis is global and the possibility of a comeback does not necessarily depend only on France. In an interview with the LCI station, Villeroy de Galhau has anticipated a very negative growth in France in 2020, although he has expressed his confidence that it should be positive in 2021, highlighting that for this he is helping employers and their employees , in order to be in a position to start growth faster when the containment measures end, stresses the Agence France Presse.

In this regard, the banker stressed that the country has the most generous unemployment system in Europe, fortunately the European and social model is there and it works, while he recalled that, on the contrary, the USA has registered 10 millions of new unemployed in just 15 days. The day before, the Labor Minister, Murielle Penicaud, revealed during a hearing by videoconference in the Senate that the number of workers who have taken part in the partial unemployment now reaches 5.8 million employees, one in four employees in the private sector . We are the only country with this level of partial unemployment, said Penicaud. A record level that, according to LCI, could cost up to 20,000 million euros in three months.

Not everyone seems to share the cautious optimism of the Governor of the Bank of France. A few days ago, I made a comparison with the great recession of 1929. I confirm it, he said Sunday in the Journal du Dimanche Minister Le Maire. This crisis is very violent. It is global since no continent is being fought and it will be durable. The difference from 1929 is that states are reacting quickly and strongly. But the impact will be massive, predicted just a few days ago the person responsible for avoiding the economic shipwreck of France, as he himself described it. The devastating economic figures for the country are known on the same day that the failure of EU ministers was confirmed, after 16 hours of negotiations, in their fourth attempt to give a joint response to the crisis that is causing the coronavirus.

The GDP of Germany will register a contraction of 4.2% in 2020 as a consequence of the impact of the Covid-19 pandemic and the containment measures implemented, which will drag the German economy in the second quarter to a historical fall of 9, 8%, the deepest in the entire historical series and more than double the collapse recorded in the first quarter of 2009, the worst of the Great Recession in the country, according to the forecasts of the main German economic research institutes. Looking ahead to 2021, the five institutes (IFO in Munich, DIW in Berlin, IfW in Kiel, IWH in Halle and RWI in Essen) anticipate a strong rebound in Germanys GDP, with growth of 5.8%, although they warn of that its forecasts have considerable associated downside risks.

According to new academic estimates, the German GDP would have registered a 1.9% drop in the first quarter of 2020, which will worsen between April and June until a 9.8% collapse as a consequence of the confinement measures applied to contain the spread of the virus, which is the largest quarterly contraction in the German economy since data collection began in 1970. Experts anticipate a sharp rise in unemployment, with an increase of 236,000 unemployed compared to 2019, to 2.5 million, which would mean an unemployment rate of 5.5%, half a percentage point more than last year. Likewise, the public accounts of the largest European economy will suffer the impact of the recession and the announced stimulus measures, which will mean that Germany will close the year with a deficit of 4.7% of its GDP, compared to the surplus of 1.4% of 2019. It would be the first negative imbalance in the German budget since 2011.

Germany is in a good position to face the economic collapse and return in the medium term to the levels it would have reached without the crisis, stressed the head of economic forecasts at the Economic Research in Munich (Ifo), Timo Wollmershuser, for who the favorable situation of public finances allows Berlin to implement far-reaching measures to cushion the impact of the crisis on companies and families.

Looking ahead to 2021, the five institutes are confident that Germanys GDP will rebound strongly, with an expansion of 5.8%, which will allow to reduce unemployment again, to an unemployment rate of 5.3%, and balance budgets , thus returning next year to zero black. However, they warn of the considerable downside risks to these forecasts, since the pandemic could take longer than expected to be controlled and efforts to revive the economy are less effective than expected, without ruling out that they may be necessary in the future. additional containment measures, which could result in further production closings and disruptions, increasing the likelihood of financial distortions and business failures beyond the States support capacity.

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Coronavirus: The two largest economies in the European Union are sinking into recession | Economy - The Union Journal

European Union member states have been debating on whether the bloc should agree on issuing new financial instruments to help countries affected with the coronavirus pandemic cope with the economic fallout of the outbreak. A total of nine EU member states, including Italy and Spain, have asked Brussels to issue joint European debt with different securities on a temporary basis to help eurozone economies cope with shut factories and business. CNBC reporter Sivia Amaro said: "Asking for this instrument are essentially the most indebted nations, such as Italy, Greece, Spain, Portugal and France.

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"They are arguing that the coronavirus is hitting every country in a similar way, which is different from what happened in the debt crisis of 2011.

"Then you hear The Netherlands and Germany asking the others to be cautious.

"They are quite sceptical about joining their debt with countries that are seen at a higher risk of default, really.

"At the same time, one European diplomat said the European Union should not use all the instruments this week because we dont know how long the coronavirus crisis will actually last.

JUST IN: Furious police working 'flat out' as 'selfish and arrogant' Britons flout lockdown laws

"So you need to save some ammunition now to save at a later stage."

Ms Amaro said sources close to EU negotiators are not expecting member states to come to an agreement, saying member states have a "deep divide" separating them.

She continued: "There is a deep divide in Europe at this stage.

"On the one hand, you have countries who want to mitigate the economic impact of the virus. On the other hand, though, you see other member states saying there is no urgency in developing new fiscal instruments.

READ MORE: Boris puts new spin on famous Thatcher quote as he announces 20,000 NHS workers return

"This conversation is not new but the coronavirus is resurfacing this discussion and adding pressure on leaders to support their economies.

"We saw nine European countries saying that its time to issue joint European debt - you can call it corona bond, you can call it euro bond.

"Essentially the idea is that this debt instrument would include different European securities. The specific thing about it is that it would be a temporary tool to deal with the coronavirus outbreak."

Italy and Spain have become two of the most affected EU member states, with the southern European countries forced to cope with 97,689 and 85,195 cases respectively.

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The Italian Government placed the whole country in lockdown nearly three weeks ago and is expected to extend containment measures well into April.

The number of deaths recorded by Rome fell for the second day in a row on Sunday, down to 756 from 889 on Saturday and a dramatic 969 recorded on Friday.

Italian officials warned if the restrictions had not been enforced, the death toll could have been even higher than it is at the moment.

Civil Protection head Angelo Borrelli said: "Without these measures, we would be seeing far worse numbers and our health service would be in a far more dramatic state.

"We would have been in an unsustainable situation."

Spain, however, saw the number of COVID-19 sufferers increase exponentially over the past two weeks, with Madrid reporting 838 people have died in the past 24 hours.

The rest is here:
EU on brink: Berlin and rich nations in bloc REJECT plea for help from COVID-19 hit states - Express.co.uk

Opinion

PUBLISHED: 15:06 30 March 2020 | UPDATED: 15:06 30 March 2020

Rubn Garrido-Yserte

Heads of state and government attend a meeting of European Union (EU) leaders at the European Council headquarter in Brussels. (JOHN THYS/AFP via Getty Images)

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What the economic downturn that began in 2008 did not achieve, could be managed by a microorganism. The outbreak and spread of the virus SARS-CoV-2 and the COVID-19 disease it causes across Europe has revealed a previous illness that had been incubating in the European Union for years.

In their book, The Existential Crisis of Europe, Csar Molinas and Fernando Ramrez Mazarredo argue:

The last major financial crisis came close to breaking down the European Union, plunged its citizens into deep pessimism and encouraged populism.

The authors finish their book advocating the need to develop a true sense of belonging to Europe. Today, we find no sense of belonging in the European management of COVID-19.

The European Union has for years been in search of a way to surpass an old institution, the nation state. But the fight against COVID-19 is being waged at national, not European level.

No coordinated actions to tackle problems

The European Commission has limited its involvement, and member states have approached the outbreak individually. The Schengen agreement, which allows freedom of movement around much of the continent, has effectively been suspended. There has been a moratorium on the enforcement of the macroeconomic stability and balance of public accounts commitments. Brussels has merely let go, but done little else.

Send your letters for publication to The New European by emailing letters@theneweuropean.co.uk and pick up an edition each Thursday for more comment and analysis. Find your nearest stockist here or subscribe for just 20. You can also join our readers' Facebook group to keep the discussion and debate going with thousands of fellow pro-Europeans.

It is no coincidence that the virus has concentrated in old Europe. Globalisation has taken it from the great factory of the world to the West, where it continued on its deadly path.

This virus confronts an ageing and suffering Europe, but also a European Union that is losing the race for technological leadership in a world suddenly fast-tracked to digital and remote solutions.

If the Asian management of the pandemic has taught us something, it is the importance of new technologies. The digital revolution is not only a source of progress and competitiveness led by China and the United States. It has proved to be fundamental when it comes to controlling the virus and giving instructions to the population. The mobile phone has been almost more useful than masks. But the EU has been found wanting in both cases.

Can we do better?

We have learned from other crises. Austerity measures have been relaxed and the European Central Bank has announced unprecedented measures. But monetary policy is not enough.

The forecasts of the Purchasing Management Index (PMI), an index of the prevailing direction of economic trends in the manufacturing and service sectors, published on March 24, shows three things:

COVID-19 has brought the largest drop in this index since records began; much greater than that experienced with the 2008 crisis.

It projects performance in the future worsening, indicating that the contraction may last longer than the initial shock if economic agents do not see adequate economic policy responses.

There is a strongly asymmetric impact between various European countries, in a very clear core-periphery pattern.

The usual question

Given these results, the usual question arises: how is monetary union going to handle such an intense shock? So far there has been no agreement on European fiscal policy, but it is absolutely necessary to start this conversation.

Jos M Gonzlez-Pramo, a former member of the executive board of the European Central Bank, and Mara Jos lvarez Gil, have written in depth on macroeconomic stability, integration and debt in the eurozone.

Much like Dani Rodrick in The Globalization Paradox: Democracy and the Future of the World Economy, they suggest that nation states have little room to carry out independent economic policies in a globalised world.

There is, they indicate, an incompatibility of maintaining national financial regulation and supervision policies with the monetary union and financial stability rules of the eurozone. National regulation framework entails a strong connection between the worsening of a countrys debt capacity and the situation of its own financial system.

Politically, national budgetary and fiscal policies cannot be maintained if a genuine monetary and banking union aspires to have democratic legitimacy. This is where we are now.

On the one hand, economic agents (the markets) expect clear and forceful responses from the authorities (including from those of the European Union). And they expect that the EU will anticipate events and prepare responses. However, when governments meet at EU summits, they speak and plan. But taking joint actions in fast moving situations often appears beyond them.

Questions that Europe does not want to answer

When future data of countries fiscal imbalances driven from direct spending caused by the management of the pandemic become public or when the fall in productive activity deteriorates public accounts, what will be the response of the European Union? Will the markets be calm when the financing needs of already heavily indebted countries increase and they try to place more debt? Will the risk premium return to startle our markets?

Today, there are only national responses to a global problem. And what Europe needs are community responses in all areas, including macroeconomics.

The European Union has relaxed the macroeconomic supervision mechanisms but still delays on making a decision on the risk sharing scheme: joint debt issuance, European coverage mechanisms and it is necessary to know how and who paid the pandemics bills.

European citizens deserve a European Union that protects them, not an absent zombie. Populism and Eurosceptic nationalisms lurk, and today, more than ever, a stronger and reliable EU is needed one that can react to crises more rapidly.

Rubn Garrido-Yserte is the director of the University Institute of Economic and Social Analysis at the Universidad of Alcal. This first appeared at theconversation.com

The New European is proud of its journalism and we hope you are proud of it too. We believe our voice is important - both in representing the pro-EU perspective and also to help rebalance the right wing extremes of much of the UK national press. If you value what we are doing, you can help us by making a contribution to the cost of our journalism.

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Coronavirus has revealed the European Union's underlying health issues | Latest Brexit news and top stories - The New European

The largest group in the European parliament has urged the UK government to do the responsible thing and extend the Brexit transition period, as coronavirus plays havoc with the timetable for an EU-UK deal.

The centre-right European Peoples party (EPP), which unites the parties of 11 EU leaders, including Angela Merkel and Leo Varadkar, issued a statement on Monday calling on the government to extend the Brexit transition beyond the end of the year.

Christophe Hansen, a MEP from Luxembourg who sits on the European parliaments international trade committee, said: Under these extraordinary circumstances, I cannot see how the UK government would choose to expose itself to the double whammy of the coronavirus and the exit from the EU single market, which will inevitably add to the disruption, deal or no deal.

I can only hope that common sense and substance will prevail over ideology. An extension of the transition period is the only responsible thing to do.

David McAllister, the German MEP who leads the European parliaments work on the future relationship with the UK, said the pandemic complicated an already very ambitious schedule. The ball is now clearly in the British court, he added.

Income subsidies

Direct cash grants for self-employed people, worth 80% of average profits, up to 2,500 a month. There are similar wage subsidies for employees.

Loan guarantees for business

Government to back 330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to 5m with no interest for six months for smaller companies.

Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britains smallest 700,000 businesses eligible for cash grants of 10,000. Small retailers, leisure and hospitality firms can get bigger grants of 25,000.

Benefits

Government to increase value of universal credit and tax credits by 1,000 a year, as well as widening eligibility for these benefits.

Sick pay

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above 94.25 a week. Small firms can claim for state refunds on sick pay bills.

Other

Local authorities to get a 500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

Under the withdrawal agreement, the Brexit transition period ends on 31 December 2020, terminating British membership of the EU single market and customs union. But it can be extended for one or two years if both sides agree by 1 July.

The EU has made little secret it would back any extension request, but the British government continues to rule that out.

Responding to the EPP statement, a UK government spokesperson said: The transition period ends on 31 December 2020, as enshrined in UK law, which the prime minister has made clear he has no intention of changing.

The plea for extra time comes as British and EU politicians prepared to hold their first meeting to discuss putting in place the Irish Sea border. The Cabinet Office minister, Michael Gove, was due to hold a conference call with the European commissions vice-president, Maro efovi, on Monday to discuss how to implement the agreement on the Irish border. The pair were also due to discuss citizens rights, amid concern from campaigners that the coronavirus crisis would make it harder for European Union nationals in the UK to secure their status.

Those talks will not touch on the future relationship, amid rising doubts about the prospects for agreeing an unprecedented deal spanning trade, security and fishing rights by the end of the year.

British and EU negotiators had concluded only three and a half days of formal talks before the coronavirus struck Europe heavily. A second round due to be held in London earlier this month was scrapped, while next weeks talks seem unlikely to go ahead, despite previous hopes of running them by video conference.

British officials say they continue to explore video-conferencing. But its not a simple fix. Only about 10 to 20 people can take part in just one thematic topic for each side, making virtual talks complicated to organise when individuals are working from home. Talks may cover about 10 different themes.

The EUs chief negotiator, Michel Barnier, has the virus, while his UK opposite number, David Frost, has symptoms and has gone into self-isolation. Officials on both sides say they are in regular contact.

Read more:
Extend Brexit transition by years over coronavirus, UK told - The Guardian

BEREC, the European Union's telecommunication regulation agency, said today that no major internet congestion issues have occurred since the onset of the coronavirus (COVID-19) crisis.

The agency said that while the overall traffic on fixed and mobile networks has significantly increased, no major downtime was recorded across Europe caused by bandwidth exhaustion incidents.

The agency's statement today comes after several internet experts made gloom & doom predictions that internet infrastructure might not be able to cope with the increase in internet traffic as most consumers are now stuck in their homes as national quarantines are imposed across Europe.

"Network operators have been able to cope well with this additional traffic load," the Body of European Regulators for Electronic Communications (BEREC) said today in a press release.

The agency said that some issues with internet access have been "observed and mitigated," but they were deemed "local and temporary," and the incidents have not been considered to be out of the ordinary.

The agency lauded telecommunications operators in some members for implementing customer-friendly measures such as increasing the amount of mobile data in their subscription packages as a way to prevent users from exhausting their monthly caps.

Furthermore, BEREC said it noticed not only "a stabilisation in [internet] traffic," but also "a decrease in the peak traffic" in some EU member states.

BEREC credited this decrease on "traffic reducing measures" put in place by "some of the larger CAPs" -- a term the agency uses for internet content and service providers.

Two weeks ago, the agency formally asked video streaming services to reduce streaming quality for European users to prevent overloading EU internet architecture.

Netflix and YouTube were the first to agree last week and began delivering SD (standard definition) streams to EU users, instead of their regular HD (high definition) quality. YouTube eventually expanded the measure to all of its global userbase, and not just for the EU.

Amazon Prime Video, Disney+, and Facebook answered BEREC's call later in the week, and also capped video streaming quality for EU or all of their users.

Akamai, Microsoft, and Sony, although not approached by BEREC officials, also agreed to slow down video game downloads during peak hours to avoid congesting internet infrastructure when a new game was published, or a game update rolled out to millions of users.

However, some internet experts have also publicly criticized BEREC's call to action as needless panic. Multiple internet service providers have come out and said that the internet backbone was specifically built to moments like these and designed to sustain sudden and very large volumes of traffic [1, 2, 3, 4].

Read more:
EU: No major internet congestion issues have occurred since COVID-19 onset - ZDNet