The EU has responded forcefully to the economic crisis brought about by COVID-19. The ECB’s aggressive easing and exceptional national fiscal stimulus measures have been complemented by unprecedented action at the EU level, thereby providing extensive support to vulnerable member states and broadening fiscal space.
Exigent circumstances justify exigent measures. But while responding strongly and effectively to the imminent risk of something resembling the euro crisis, the COVID-19 measures risk leaving the EU more vulnerable in the longer run. While explained as exceptional and temporary, they transform the EU into an incomplete fiscal union, which is fragile in the face of future shocks. These measures need to be balanced with strengthened market discipline and – ultimately – backed up by clear divisions of competence, unambiguous assignment of responsibility, and efficient decision-making structures.
The European Central Bank (ECB) is the central bank of the 19 European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
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Could a new financial crisis, brought on by the Covid-19 pandemic, lead to Italy’s exit from the eurozone?
Lucio Baccaro, Björn Bremer
Erik Neimanns
present evidence from a new survey experiment on Italian attitudes toward a European bailout and exit from the euro. They find that a majority of voters would opt to stay in the euro if a bailout did not involve conditionality, but that there would be a majority for leaving if a bailout were contingent on austerity policies.
Covid-19 has increased the risk of a new financial crisis in the eurozone. This time the epicentre would most likely be Italy, where public debt, already very high before the pandemic, nearly reached 160% of GDP in 2020, and growth has stagnated for the past 25 years. If financial markets started to have doubts about the sustainability of Italian debt, they would push the interest rate spread up, and force the Italian government to either ask for a European bailout or exit from the eu
Date:Â 07/04/2021
The German Constitutional Courtâs postponing of its decision on two claims against the EU recovery fund does not (yet) mean that Next Generation EU will not happen. But there will be a delay and the courtâs final decision might remain uncertain for some time.
On 14 December 2020, after arduous negotiations (including a four-day European Council session in July), and following approval by the European Parliament, the EU Council unanimously adopted a new Decision on the EUâs Own Resources (ORD). This Decision contains, in particular, the necessary provisions for the financing of the temporary EU Recovery Fund (â¬750 bn: â¬390 bn in grants and â¬360 bn in loans), also called Next Generation EU (NGEU).Â
Why the German Constitutional Court will (probably) not kill the €750 epc.eu - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from epc.eu Daily Mail and Mail on Sunday newspapers.