Abstract
This paper looks at the responses of the European Union (EU) towards the coronavirus outbreak. It also analyses the responses of the top five affected countries in Europe (Italy, Spain, Germany, France and UK) towards mitigating the crisis. The paper also provides tables and figures in the appendix highlighting the spread of the virus.
Outbreak of the Crisis: Europe as the New Epicentre
Since its emergence in Wuhan, China in December 2019, coronavirus has spread worldwidewith almost 339,000 cases and more than 14,000 deaths across 152 countries (as on 23 March 2020), with Europe accounting for one-third of the cases.[i]Europe reported its first coronavirus case in early February 2020, however, the spread of the virus intensified between 25 and 28 February with almost 20 European countries reporting fresh cases. Italy has reported the maximum number of confirmed cases, followed by Germany and France. Keeping the track on the spread of virus, European Centre for Disease Prevention and Control raised the coronavirus risk level from moderate to high on 2 March 2020, with European Commissioner for Crisis Management, JanezLenarcicsaying “While we should not give in to panic, the situation is likely to get worse”.[ii]
On 13 March 2020, the World Health Organisation (WHO) declared the European continent as the new epicentre of the novel coronavirus (COVID-19). Italy surpassed China on 23 March 2020 with the most number of deaths at 4,827 of total 53,578 cases reported.[iii]The crisis has led the European countries to take unprecedented measures like imposition of nation-wide restrictions, National Border Controlsand curtailing movements of goods and people. The countries and the European Union (EU) have put in place several mechanismsand responses to monitor and contain the spread of the virus. The following section looks at the responses from the EU and the top five affected countries (Italy, Germany, France, Spain, and the UK).
Responses
The spread of coronavirus across the European continent has emerged to be the biggest challenge for the EU and its member states in the recent times. Along with the restrictions on cross-border movement of goods and people for 30 days (till 15 April 2020)[iv], EU has proposed economic stimulus packages along with the European Central Bank (ECB) to cushion the economy from the fallouts of coronavirus. According to the EU, the COVID-19 crisis is expected to have a detrimental economic impact on the EU and euro area with the fall by -1% of GDP in 2020, with a substantial but not complete rebound in 2021[v].
The European Commission (EC) on 13 March 2020 announced[vi]the first economic stimulus package to mitigate the impact of the crisis. One of the most important measures taken was to facilitate immediate relief for the medium and small scale industries through a€1 billion fund made available from the EU budget as a guarantee to the European Investment Fund (EIF). The support would be channelled through the existing instruments of the EIF Programmes that support investment. Additionally, credit holidays - allowing for delayed repayments of loans - would be implemented for affected companies under the same instruments. Second was the “Coronavirus Response Investment Initiative” (CRII). Under this, the Commission proposed to direct €37 billion under the cohesion policy to the COVID-19 outbreak. Under this, the Commission proposed to relinquish its obligation to request refunding of unspent pre-financing for European structural and investment funds held by the member states. This amounts to about €8 billion from the EU budget which the member states will be able to use to supplement €29 billion of structural funding across the EU. This amount is to support the healthcare system, through the financing of health equipment and medicines, testing and treatment facilities, disease prevention, e-health, etc.; to provide liquidity to corporates in order to tackle short-term financial shocks linked to the coronavirus crisis, covering working capital in SMEs to address the losses due to the crisis, with special attention on sectors thatare hardest hit; and to temporarily support national short time working schemes which help cushion the impact of the shock. Also as part of the initiative, the Commission proposed to extend the scope of the EU Solidarity Fund by also including public health crisis within its scope. Up to €800 million was made available in 2020. The European Globalisation Adjustment Fund could be also mobilised to support dismissed workers and those self-employed. Up to €179 million is available.[vii]
Additionally, to supplement the fight against the virus, on 19 March 2020, the EC adopted a Temporary Framework to enable member states to use the full flexibility foreseen under the ‘state aid rules’ to support the economy. The aim is to ensure that businesses have the liquidity to keep operating, or to put a temporary freeze on their activities, if need be, and that support for businesses in one member state does not undermine the European single market. Five types of aids are made available to the member states: first, set up schemes direct grants (or tax advantages) up to €800,000 to a company; second, give subsidised state guarantees on bank loans; third, enable public and private loans with subsidised interest rates; fourth, use banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies - the Temporary Framework makes it clear that such aid is direct aid to the banks' customers and not to the banks themselves; and fifth, introduce additional flexibility to enable short-term export credit insurance to be provided by the state where needed.[viii]
The European Central Bank (ECB) has launched an emergency €750 billion calling it “whatever it takes” plan. The ECB called it the Pandemic Emergency Purchase Programme (PEPP), which would buy corporate and government debt from across the eurozone in a “flexible manner” to spread the money among countries in need. The program has taken effect immediately and wouldlast until the end of 2020 with flexibility of extension if required. The €750 billion comes in addition to the €120 billion measure, plus the existent €20 billion-a-month bond-buying program. The total amount is the largest monetary stimulus package envisaged in a nine-month span[ix].
Various member states have taken drastic steps, including complete lockdown of their cities, raising of national borders to restrict movement of goods and people, introduction of economic stimulus packages etc., to contain the spread of the virus. Italy has emerged to be the worst affected country with almost 69176 confirmed cases and 6820 deaths as on 25 March 2020. The Italian government has adopted stringent restrictions with the shutdown of the northern region on 8 March 2020 and the complete lockdown of the country on 10 March 2020. Another key measure adopted by the government was the imposition of fine up to $234 or jail for up to three months for individuals who defy the lockdown. With the idea of “nobody will be left alone”, the government also announced an economic decree of €25 billion to support the economy reeling under the pressure of the outbreak. It suspended the loan and mortgage repayments for businesses and families, and increased the funds for the small and medium businesses to help pay the workers temporarily laid off due to lockdown. The decree also provided immediate relief of €3.5 billion to help the healthsector and €10 billion to support families and workers. Also with the entire EU reeling under the pandemic, Italy has received massive support from China, Russia and Cuba. China was the first country to send teams of doctors and medical staff along with equipment to bolster the crumbling Italian health care. Cuba has also sent team of medical practitioners and Russia has offered help in the form of mobile disinfection vehicles and specialists to aid the worst hit Italian regions. Russia also plans send about 100 military specialists in virology and epidemics.
After Italy, Spain is the second-worst affected with almost 39673 confirmed cases and 2696 deaths as on 25 March 2020. The country was put under complete lockdown on 14 March 2020 with Prime Minister Pedro Sánchez activating Article 116 of the Constitution “allowing the government to limit the movement of people and vehicles, requisition of goods, takeover of factories and businesses and ration the consumption of basic items”. With its healthcare system under severe strain, the government has announced that the private health providers will be engaged and their facilities will specifically be requisitioned for coronavirus patients and several hotels will be turned into medical facilities to treat mild-symptom patients. The government on 17 March also announced an economic stimulus package of €200 billion to mitigate effects of coronavirus. This was in addition to €14 billion initially putin the economy. This economic package represents nearly 20% of Spain’s annual economic output. Of this amount, “€117 billion will come from the public purse, with the remainder being private money”. The Prime Minister also announced that the “workers will be able to receive unemployment benefits even if they have not paid enough in social security contributions, and companies will not have to pay taxes for employees who have been temporarily made redundant. Sánchez also called on the EU to put forward a plan to boost the European economy.”
Germany has so far reported 31673 cases with 149 deaths (figures of 25 March 2020) pushing the country in lockdown. Chancellor Angela Merkel has pledged government support for “the economy and for society on all levels”.[x] The government has proposed to present an economic bill of up to €356 billion for the coronavirus pandemic in the German Parliament in the coming week to give the government borrowing powers and to establish a business rescue fund of around €600 billion. The government has already approved the proposal of unlimited loans for companies through state-controlled banks to protect the small and medium enterprises. The government has made it clear that there is no capping on the total aid for the affected companies and it can also consider nationalising the businesses that are hardest hit by the crisis.
In an address to the nation on 12 March 2020, French President Emmanuel Macron said that France “…faced its worst public health crisis in a century. France would do “all it takes” to preserve its economy, jobs and businesses”[xi]. He also announced the launch of “army Operation Resilience to provide support in the fight against COVID-19. As part of the new Operation Resilience, the army will be deployed to help with logistics and medical support. France is also deploying helicopter carriers to help transport patients in overseas French territories in the Caribbean, South America and the Indian Ocean, Macron announced. This new operation would be entirely devoted to aid and support for the population, as well as support for public services to deal with the epidemic”[xii]. France has reported 22302 confirmed cases of COVID-19 with 1100 deaths (as on 25 March 2020) compelling the President to put in place toughest restriction on public life. It was announced that the police forces will be deployed to enforce the lockdown and check-posts would be set up nation-wide and any individual not adhering to the rules would be fined between €38 euros to €135. The government also announced €45 billion economic aid package for small businesses. It was highlighted that “more than 3.5 million businesses could be impacted by confinement measures which suspend many economic activities in the country. The €45 billion stimulus will mainly take the form of reduced social security contributions for an amount of €35 billion. Unemployment benefits linked to forced part-time employment will cost the government €8.5 billion, while a solidarity fund for the self-employed and shopkeepers will require at least €2 billion”.[xiii]
UK’s initial approach of ‘keep calm and carry on’ and ‘go it-alone’ appeared to have been influenced by “a controversial theory embraced by the UK government’s top scientists: that the best way to ease the long-term consequences of the coronavirus pandemic was to allow the virus to spread naturally in order to build up the population’s herd immunity.”[xiv] However, the approach seems to have backfired for the Boris Johnson’s government with UK reporting 8077 confirmed cases with 422 deaths as on 25 March 2020. On 20 March 2020, the government announcedanation-wide lockdown and social distancing measures. UK has coordinated its economic response by establishing a small group of top minister – the Prime Minister, Chancellor, Foreign Secretary, Health Secretary and Cabinet Office Secretary – which will look over the economic responses on a daily basis. With the promise to “do whatever it takes”[xv], the UK government on 17 March 2020 has pledged 330 billion pounds in government-backed loans and guarantees to shield businesses. Other measures included three-month mortgage holidays for homeowners, 10,000 pound grants for small businesses, and plans to specifically support the aviation industry. This package followed 30 billion pound package announced in the budget, which included helping small companies via tax breaks and loans, 5 billion pounds for the state-run National Health Service and 18 billion pounds in fiscal stimulus, alongside interest rate cuts by the Bank of England.
Analysis
Although, the EU and the nation states have put in place massive bail-out programmes to mitigate the economic damage, the mounting death rate points to the crumbling healthcare sectors across the countries. This sector is under severe pressure to cater to the patients and their intensive care units are completely overwhelmed due to such pressure. The situation is so critical, especially in Italy that the doctors and nurses are under pressure to prioritise patients with best chance of survival[xvi]. This brings us to question as to why Italy has been particularly hit hard with the COVID-19. The northern regions of Lombardy, Veneto and Emilia-Romagna have been most affected. 85% of infected patients belong to the region accounting for 92% of deaths so far. But the virus has been confirmed in all 20 regions of the country. There are two major reasons – first, the spread of virus appeared to have remained undetected for some time and by the time it was detected the transmissions chains were already happening. Second, the demography of the country is in favour of older population with 23% of the population over the age of 65. The country is facing above-average mortality rate at 4% due to virus primarily because the average age of coronavirus patients who have died is 81.[xvii]
With the number of cases reported every day in Europe,surpassing China, it appears that the continent has been in a global comparative sense the worst hit. This is so because unlike in China, where majority of cases were reported from one province making it easy for the government to put the entire city into quarantine, in Europe the outbreak is being reported from every part of the continent, with different countries adopting different strategies to deal with the virus. As health management is an inter-governmental issue, EU institutions have very limited role to play in guiding policy approaches of member states, and thishas emerged to be a source of tension during this crisis.
The COVID-19 crisis appears as a severest test for the EU as it has highlighted the gaps in the current EU structures. Its solidarity appears to be cracking because of the unilateral decisions taken by the member states to mitigate the effects of the crisis. For example, the decision to stop the exports of face masks by Germany[xviii] had caused outrage in Austria and Switzerland - this was further exacerbated by several member states putting restrictions on their exports of medical equipment, as a complete violation of the EU single market. Although, EC President Ursula von der Leyen appealed to the member states to share medical supplies in the bloc, so far no country has responded comprehensively[xix]. Also the raising of the national borders within the Schengen area and outside stands in violation of EU’s sacrosanct principle of free movement.
The entire European continent is in disarray with millions of people under shutdowns, private and public sectors struggling to stay afloat and the governments struggling to formulate policies to counter an unexpected crisis.The responses to the crisis is still evolving but one is clear that the EU member states so far have appeared to have turn inwards focusing on national policies and priorities rather than working through the EU to contain the crisis. This highlights the fact that Brussels has limited tools to aid its member states; therefore, it is every nation for itself.
Appendix 1: Total Number of Cases
EU/EEA and the UK |
Total Number of Cases (As on 26 March 2020) |
Total Number of Deaths (As on 26 March 2020) |
Italy |
74386 |
7505 |
Spain |
47610 |
3434 |
Germany |
36508 |
198 |
France |
25233 |
1331 |
United Kingdom |
9529 |
422 |
Netherlands |
6412 |
356 |
Austria |
5888 |
34 |
Belgium |
4937 |
178 |
Portugal |
2995 |
43 |
Norway |
2916 |
12 |
Sweden |
2510 |
42 |
Denmark |
1724 |
34 |
Czech Republic |
1654 |
6 |
Ireland |
1564 |
9 |
Luxembourg |
1333 |
8 |
Poland |
1051 |
14 |
Romania |
906 |
13 |
Finland |
880 |
3 |
Greece |
821 |
22 |
Iceland |
737 |
2 |
Slovenia |
528 |
4 |
Croatia |
418 |
1 |
Estonia |
404 |
1 |
Lithuania |
274 |
4 |
Hungary |
261 |
10 |
Bulgaria |
242 |
3 |
Latvia |
221 |
0 |
Slovakia |
216 |
0 |
Cyprus |
132 |
3 |
Malta |
129 |
0 |
Liechtenstein |
51 |
0 |
Total |
232470 |
13692 |
Source: ECDC, https://www.ecdc.europa.eu/en/cases-2019-ncov-eueea
Appendix 2: Country-wise Distribution (Figures as on 26 March 2020)
Source: ECDC, https://www.ecdc.europa.eu/en/cases-2019-ncov-eueea
Appendix 3: Distribution of Confirmed Cases (As on 26 March 2020)
Source: ECDC, https://www.ecdc.europa.eu/en/cases-2019-ncov-eueea
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*Dr. Ankita Dutta, Research Fellow, Indian Council of World Affairs.
Disclaimer: The views expressed are that of the Researcher and not of the Council.
End Notes
[i]Situation Update for EU/EEA and the UK, ECDC, 22 March 2020, https://www.ecdc.europa.eu/en/novel-coronavirus-china, Accessed on 24 March 2020
[ii]The Guardian, 2 March 2020, https://www.theguardian.com/world/2020/mar/02/eu-raises-risk-coronavirus-infection-from-moderate-high, Accessed on 24 March 2020
[iii]Situation Update for EU/EEA and the UK, ECDC, 22 March 2020, https://www.ecdc.europa.eu/en/cases-2019-ncov-eueea, Accessed on 23 March 2020
[iv] COVID-19: Temporary Restriction on Non-Essential Travel to the EU, European Commission, 16 March 2020, https://ec.europa.eu/transparency/regdoc/rep/1/2020/EN/COM-2020-115-F1-EN-MAIN-PART-1.PDF, Accessed on 24 March 2020
[v] The Economic Impact Of The Covid-19 Pandemic, Coordinated economic response to the COVID-19 Outbreak, 13 March 2020, European Commission, https://ec.europa.eu/info/sites/info/files/communication-coordinated-economic-response-covid19-march-2020_en.pdf, Accessed on 24 March 2020
[vi]Coordinated economic response to the COVID-19 Outbreak, 13 March 2020, European Commission, https://ec.europa.eu/info/sites/info/files/communication-coordinated-economic-response-covid19-march-2020_en.pdf, Accessed on 24 March 2020
[vii]Ibid.
[viii] Corona Response, Economy, European Commission, https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/economy_en, Accessed on 24 March 2020
[ix]Politico, 17 March 2020, https://www.politico.eu/article/the-ecb-rises-up-to-expectations-launches-massive-bond-buying-program/, Accessed on 24 March 2020
[x]The Guardian, 13 March 2020, https://www.theguardian.com/world/2020/mar/13/european-countries-take-radical-steps-to-combat-coronavirus, Accessed on 24 March 2020
[xi]France24, 13 March 2020, https://www.france24.com/en/20200325-macron-launches-army-operation-resilience-to-support-fight-against-coronavirus, Accessed on 24 March 2020
[xii]Ibid.
[xiii]Politico, 17 March 2020, https://www.politico.eu/article/france-injects-billions-into-stimulus-plan-amid-coronavirus-chaos-bruno-le-maire-economic-catastrophe/, Accessed on 24 March 2020
[xiv]Owen Matthews, “Britain Drops Its Go-It-Alone Approach to Coronavirus”, Foreign Policy, 17 March 2020, https://foreignpolicy.com/2020/03/17/britain-uk-coronavirus-response-johnson-drops-go-it-alone/, Accessed on 24 March 2020
[xv]The Guardian, 17 March 2020, https://www.theguardian.com/world/2020/mar/17/coronavirus-rishi-sunak-promises-to-guarantee-330bn-loans-to-business, Accessed on 24 March 2020
[xvi]Euronews, 12 March 2020, https://www.euronews.com/2020/03/12/coronavirus-italy-doctors-forced-to-prioritise-icu-care-for-patients-with-best-chance-of-s, Accessed on 23 March 2020
[xvii]Why is Italy’s Coronavirus Outbreak so bad, Time, 10 March 2020, https://time.com/5799586/italy-coronavirus-outbreak/, Accessed on 23 March 2020
[xviii]Reuters, 4 March 2020, https://www.reuters.com/article/health-coronavirus-germany-exports/germany-bans-export-of-medical-protection-gear-due-to-coronavirus-idUSL8N2AX3D9, Accessed on 24 March 2020
[xix]Euronews, 16 March 2020, https://www.euronews.com/2020/03/16/ursula-von-der-leyen-tells-eu-countries-to-share-medical-supplies, Accessed on 23 March 2020