The European Union has come under fire over the perceived slow response in helping member states ravaged by the coronavirus protect their economies. Financial leaders from the 27 countries will be asked to consider proposals from Spain for a €1.5trillion (£1.3trillion) investment package to rebuild worst-hit economies. But with the EU27 apparently torn over the issue of how to better respond to the crisis, Brussels has now been warned “either we all sink or we all float.”
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Spanish Foreign Affairs Minister Arancha González Laya defended her government’s proposals, insisting the plan would give the EU a chance to maintain a strong position on the international stage at the end of the crisis.
Speaking to Euronews, Ms González Laya said: “What we need in this crisis is, either we all sink or we all float.
“Spain wants everybody to float, for sure, and this is why what we have done is what every country who wants to help build consensus in Europe would do.
“We put a fiscal proposal on the table, a proposal that is responsible, it builds on existing mechanisms, it’s ambitious.”
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She continued: “What we will have is a huge recovery ahead of us given the damage COVID is causing.
“But it’s also a response that will give us the means that we want to keep Europe as a strong player not only on the world economy but also in world foreign and political affairs.”
At the last Eurogroup meeting held in Brussels earlier this month, eurozone members appeared to partially bridge the gap created by the outbreak after richer northern states rejected suggestions of issuing common debt to help struggling countries.
The bloc agreed to reform the European Stability Mechanism (ESM) to keep conditions imposed on countries requesting support to a minimum, thus freeing up €240billion (£211billion) to guarantee spending.
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The EU27 also agreed to a €500billion (£439billion) rescue package as well to a €200billion (£175billion) in guarantees from the European Investment Bank.
Spain’s proposal comes after the national central bank warned their GDP could suffer a 13.6 percent slump because of the business closures the coronavirus pandemic caused.
And UniCredit Group chief economist Erik Nielsen warned the forecast by the Bank of Spain could still be quite optimistic compared to his.
Speaking to Bloomberg, Mr Nielsen said: “Our forecast for Spain this year is minus 15 percent and about the same for Italy.
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“This is the story of countries in southern Europe that are very dependent on the tourism sector.
“Even if you open up the economy, we think it is unlikely that people will go on holiday this summer to the Mediterranean.
“So there will be a bigger hit there than in northern Europe.
“Northern Europe will see a drop in the range of 8 or 10 percent.
“It is a guess more than anything else, but it seems to be of that magnitude.”
Spain and Italy are the second and third worst-hit members of the eurozone, with both countries now facing the looming threat of recession in addition to preexisting economic struggles leftover from the 2008 global financial crisis and the European debt crisis.
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