Europe’s economic response to the coronavirus epidemic has to based on options on which all countries agree and which can be deployed quickly, European Commission spokesman Eric Mamer said on Monday, effectively ruling out joint debt issuance.
Euro zone countries are deeply divided over whether or not they should jointly borrow on the market to counter the deep recession that the coronavirus is expected to cause in Europe.
Joint debt issuance would also take some time, because it would require either an EU treaty change or a separate treaty, officials said.
EU leaders have asked euro zone finance ministers, the Eurogroup, to come up with proposals within two weeks on how the bloc can support the coronavirus-hit economy.
“The Eurogroup will meet on 7 April to act on the leaders’ mandate and deliver proposals to reinforce our EU policy response to #Covid19,” the chairman of the ministers, Mario Centeno, said on Twitter.
While nine euro zone countries including Italy, France and Spain would like to see joint debt issuance, the idea is unacceptable to Germany, the Netherlands and Finland.
Officials said the work of the finance ministers was likely to focus on adapting the existing precautionary credit line of the euro zone bailout fund ESM to suit a euro zone-wide health emergency like the pandemic.
A German government source said there was cross-party unity among Chancellor Angela Merkel’s CDU, its CSU sister party and the co-governing SPD on the use of the ESM.
Germany was willing to help countries such as Italy, “but for that we have the ESM which can activate hundreds of billions of euros,” the source said.