Even Orban’s Hungary among the penalty takers. Rising from 4 to 7. Loans at risk
It is bad in Europe for Italy. In fact, the front of the so-called “frugal” countries that want to put the brakes on the Recovery Fund project is widening, which would see, between loans and grants, around 170 billion euros granted to Italy to support the recovery. economic after the Coronavirus emergency.
A message of support for the measures put in place by Europe to deal with the economic crisis dictated by the coronavirus comes to the rigorists. The proposal of the EU Commission to intervene on the multi-annual budget and the instrument for recovery Next Generation EU are “decisive” for an “extraordinary European response” to the emergency and must be “adopted quickly”. Words by Christine Lagarde, the number one of the ECB, who at the hearing of the European Parliament makes it known that to overcome the crisis of “unprecedented” dimensions, “extraordinary actions” are needed, both national and community. As for the package of measures implemented by Frankfurt, the president stressed that “they are temporary, targeted and proportionate” and that the pandemic Qe is the “most appropriate” instrument.
But Europe has not yet reached a common perspective: according to the Financial Times, the front of the countries skeptical about how to allocate funds in response to the crisis goes from 4 to 7 Member States. «We had to react quickly. There was nothing else to do, “defends Eurotower number one in the EU Parliament. “There has been a deterioration and we have realized the impact of the closures on all sectors of the economy, one sector after another,” explains Lagarde, freeing himself from the definition of ‘queen of debts in relation to the positive effect that the actions of the ECB had on the spread trend of some European countries, including Italy. “I would prefer to be mentioned as the one that reacted quickly to an economic crisis that could have plunged the eurozone into a negative vortex,” says Lagarde.
Looking at the actions taken since the outbreak of the coronavirus, Lagarde can say that “the monetary policy measures adopted by the ECB in March were fundamental in eliminating the tail risk associated with the Covid-19 pandemic and the consequent risk that the fall in activity economic situation turns into a financial crisis “, in fact” since March, this risk has substantially decreased “. The recipe implemented by the ECB is to use “temporary, targeted and proportionate” measures. In detail, their temporary nature “is reflected, for example, in the net horizon of Pepp’s purchases”, the ECB’s pandemic quantitative easing “which should last at least until the end of June 2021, and in any case until the Governing Council will not judge that the coronavirus crisis phase is over, “recalls Lagarde. The ECB measures “are aimed at specific shock and contingency at hand, aimed at remedying the economic difficulties caused by the pandemic. And they are proportionate to the serious risks we are facing for our mandate, “highlights Eurotower number one. The economic shock, this time, “does not come from the financial system” and risks triggering “widespread defaults in the real economy, especially among businesses and families who were already in debt”.
Meanwhile, the signs of unity on the Recovery Fund seem to stop from Europe. “We are not trying to help countries with decades of poor economic management and lack of reforms,” says a European diplomat to the Financial Times, worried together with some of his counterparts that the European Commission is proposing to use a series of economic measures ” obsolete ‘to determine how many Member States will receive resources from the Fund. Among the rigorists not only the Northern front (Austria, Holland, Denmark and Sweden), but also Ireland, Lithuania and Hungary. According to diplomats cited by the Financial Times, the methodology used by the Commission to determine the location of resources has no direct link with the pandemic. Tomorrow Ecofin will discuss the plan for the recovery of Europe again.