The EU’s Response to the Economic Impact of Coronavirus

Article written by Lynn Spiteri – Executive, MEUSAC
Published in The Malta Independent – 08.04.2020

The current outbreak of coronavirus disease, also known as COVID-19, is having a significant economic and social impact across the world. In Europe several governments have taken measures to limit public events and gatherings of crowds. For instance, France, Belgium and Italy imposed lockdowns, Spain and Malta have ordered schools and non-essential shops to close and Germany and Malta have opted for strict social distancing measures to avoid the spread of this disease. Both Portugal and Spain have also declared a state of emergency.

Although important to curtail the spread of this virus, such measures are also having a negative effect on businesses, such as those operating within the hospitality industry.  It is difficult to estimate the overall economic impact this pandemic will have by the time it has passed.

In view of the considerable transnational impact of this outbreak, the European Union (EU) has been mobilising its resources to offer assistance to its Member States and pool resources and meet this crisis head-on.

The EU Civil Protection Mechanism is an existing initiative which aims to strengthen cooperation between the EU Member States as well as Iceland, Norway, Serbia, North Macedonia, Montenegro and Turkey in the field of civil protection. Through the Mechanism it is possible for the EU to provide a coordinated response to disasters or emergencies in Europe and beyond. In light of the current situation, it is now being used to pool and mobilise resources more efficiently to address the coronavirus pandemic.

A new European reserve of capacities (known as the ‘rescEU reserve’) set up in 2019 within the EU Civil Protection Mechanism is acquiring face masks, medical equipment and other necessary supplies to combat COVID-19 and ensure that they can quickly get to Member States facing shortages of equipment. This is being done in an effort to slow down the spread of the virus and treat those who have contracted the virus. Aside from this, as per a press release of the European Parliament published on March 23rd, more than 1,800 citizens have been repatriated from all over the world following the outbreak of COVID-19 through this Mechanism.

Within the existing framework of the current EU budget 2014-2020, on March 13th the European Commission announced it will mobilise additional Cohesion Policy funding to health systems, SMEs and labour markets which have been impacted.

The European Parliament (EP) held an extraordinary plenary session on March 26th to debate and vote on the first three legislative proposals of the European Commission to tackle the effects of the COVID-19 pandemic. On March 30th the EP almost unanimously adopted three urgent proposals to help citizens and businesses tackle the current crisis. These proposals are:

·  The Corona Response Investment Initiative which will channel €37 billion from available EU funds as soon as possible to focus on (i) corona-relevant health expenditure in any part of the Member States, such as hospital equipment, inhalators, and masks; (ii) support to SMEs working capital; and (iii) short-term employment schemes.  .

·  The extension of the EU Solidarity Fund to cover public health emergencies. The measures will make up to €800 million available for European countries in 2020.

·  Temporarily suspending EU rules on airport slots. This will stop air carriers from operating empty flights during the pandemic.

MEPs within the Committee on Budgets have also called on the European Commission to make available additional funding to cushion the economic impact this pandemic is having on the EU’s economy. The Commission has replied in part by launching the Temporary Framework for State aid measures to support the economy, which provides more flexibility to Member States when it comes to state aid rules to support businesses negatively affected by the current crisis.

The European Commission has communicated through its website that it is promoting solidarity within the Single Market by providing guidance for Member States on how to put in place adequate control mechanisms to ensure security of supply. It is also launching a more streamlined and efficient procedure for these items and issuing a recommendation on non CE-marked protective equipment (the CE marking indicates that products conform to relevant EU directives regarding health and safety or environmental protection).

To protect workers who might be at risk of unemployment from the repercussions of the current crisis, the Commission has introduced the temporary Support mitigating Unemployment Risks in Emergency (SURE) initiative. This initiative will provide funding up to a total of €100 billion to Member States in the form of loans with favourable terms to finance schemes to protect jobs, as well as to assist the self-employed.

The situation is still developing and so is the response at both national and EU levels. The measures already taken instil confidence that the EU can be flexible enough to meet the challenges resulting from this pandemic and that Member States can successfully cooperate to navigate this crisis with a unified front.

For further information on the EU budget including the funding mechanisms mentioned above, kindly contact MEUSAC on or 2200 3300.

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