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EU to go spezial - 23.04.2020

Virus vs. economy - a European response?

Foto CC Jacques Delors Centre/ Nicole Koenig

The current situation stemming from the corona virus pandemic was not only the thematic focus of the "EU to go spezial", but also determined the setting of the event on April 23, 2020: For the first time in digital webinar format with over 200 participants, our experts presented European developments and measures to over 200 participants and examined a possible instrument at EU level to mitigate the pandemic.

Nils Redeker from the Jacques Delors Centre and Natascha Hainbach from the Bertelsmann Stiftung introduced the event with the results of their recently published policy paper "Flattening the Recession Curve". They emphasized that despite the outbreak of the virus occurs throughout Europe, the current crisis has divergent economic effects in the European economies. EU countries are not only affected to different degrees by the crisis, for example due to their sectoral composition, but also show large differences in the fiscal policy measures they have taken so far. However, the different design of the measures does not reflect the differences in the strength of the shock induced by the pandemic. It can rather be assumed that it depends on the fiscal room for manoeuvre of the member states whether they have so far intervened with rather limited or extensive measures.

In the second part of the event, Lucas Guttenberg of the Jacques Delors Centre built on these findings and outlined a possible response to the corona crisis at EU level. Since neither further divergence nor over-indebtedness of the EU countries would be politically and economically sustainable, an instrument for real burden sharing at EU level was needed, which goes beyond the mere payment of loans, Guttenberg argued. Such an instrument would be a pandemic solidarity fund for pandemics, which he explains in detail in his recent policy paper "Sharing the fiscal burden of the crisis" (in cooperation with Sebastian Grund and Christian Odendahl). In this way, the EU could borrow large sums of money on the market and distribute itthem to member states as subsidies to member states for specific spendingexpenditures in areas such as health care, short-time work or economic stimulus packages. The European Investment Bank should also receive guarantees from the EU in this way to provide liquidity to European companies. The implementation of this instrument would be economically and legally possible - it depends above all on political will, Guttenberg concluded.

After the presentation there was a round of questions and answers as usual. The virtual format enjoyed ample demand and participation.was well received by the participants.

The event was organized as part of "Repair and Prepare: Strengthening Europe," a joint project of the Bertelsmann Stiftung and the Jacques Delors Centre. The project is currently also analysing the economic impact of the pandemic on the EU's singleinternal market and the eurozone.