16 March 2020

Council of the EU: Statement on COVID-19 economic policy response

Council of the EU and European Council will make use of all instruments necessary to limit the socio-economic consequences of the COVID-19 outbreak. They have therefore put together a first set of national and European measures while setting a framework for further actions to respond to developments and to support the economic recovery.

Preliminary estimates of the European Commission show that total fiscal support to the economy will be very sizeable. Council of the EU and European Council have, so far, decided fiscal measures of about 1% of GDP, on average, for 2020 to support the economy, in addition to the impact of automatic stabilisers, which should work fully. Council of the EU and European Council have, so far, committed to provide liquidity facilities of at least 10% of GDP, consisting of public guarantee schemes and deferred tax payments. These figures could be much larger going forward. 

The following measures are part of their co-ordinated responses to protect our economies.

1. All national authorities will allow automatic stabilisers to function and in addition implement all necessary measures to ensure that the economic consequences of COVID-19 are tackled and that they do not put in danger our economic and social achievements.

2. Coordinated efforts at the European level will supplement national measures:

• Council of the EU and European Council welcome the Commission’s proposal for a €37 billion “Corona Response Investment Initiative” directed at health care systems, SMEs, labour markets and other vulnerable parts of our economies, and to make a further €28 billion of structural funds fully eligible for meeting these expenditures. We agreed on the need to implement the necessary legislative changes as quickly as possible;
• Council of the EU and European Council welcome the initiative of the Commission and the EIB Group to mobilise up to €8 billion of working capital lending for 100,000 European firms, backed by the EU budget, by enhancing programmes for guaranteeing bank credits to SMEs. We also support the ongoing efforts of the Commission and the EIB Group to increase this amount to up to €20 billion, which would reach a further 150,000 firms. We also welcome the ongoing work to make further funds available as swiftly as possible and to enhance the flexibility of the financial instruments leveraged;
• Council of the EU and European Council welcome the initiative of the EIB Group to catalyse €10 billion in additional investments in SMEs and midcaps for their own account and to accelerate the deployment of another €10 billion backed by the EU budget;
• Council of the EU and European Council invite the EIB to further enhance and accelerate the impact of the available resources, including through enhanced collaboration with the National Development Banks;
• Council of the EU and European Council also welcomed the package of monetary policy measures taken by the ECB last week aimed at supporting liquidity and funding conditions for households, businesses and banks, help the smooth provision of credit to the real economy, and avoid fragmentation of euro area financial markets in order to preserve the smooth transmission of monetary policy.

3. Beyond the immediate, targeted response, we are working on all the necessary measures, to help the economy recover once the coronavirus has receded. Council of the EU and European Council acknowledge the need to reflect on the resilience of our European strategic value chains to better protect Europe from product and capital market disruptions in the future. Council of the EU and European Council have already significantly strengthened their crisis management framework, including with the establishment of the ESM. Council of the EU and European Council recommit to continue their work to further strengthen the architecture and resilience to shocks of the Economic and Monetary Union.

Full statement on Council of the EU

© Council of the European Union