COVID-19: The Design of an Efficient and Unified Economic Response

Executive Summary

• The crisis triggered by the COVID-19 outbreak is expected to be amongst the most violent ever, with social consequences aggravated by its very nature. It has clearly shown how crucial the provision of public services and SGIs, such as healthcare, water, energy, waste management, telecommunications, education, housing and transport, is to the well-being of citizens and the economic resilience of the EU.
• Whilst the economic and social impact of the COVID-19 outbreak remains difficult to estimate, we urgently need measures aimed at protecting economic structures in order to avoid their collapse and, in the near future, enable their full rehabilitation and the consequent reestablishment of growth.
• This CEEP paper on the COVID-19 outbreak will focus on the immediate economic response and its instruments, highlighting the institutional constraints that must be tackled in order to build an efficient and unified approach at the EU level, and focusing on the following:
  • The European Stability Mechanism: The use of the ESM to face symmetric shocks can only be effective if its provisions are adapted to the specific challenge, including in this case a long duration and a commitment by Member States to full transparency.
  • The European Instrument for Temporary Support to Mitigate Unemployment Risks in an Emergency (SURE): SURE funding must effectively be dedicated to measures protecting employees and self-employed against the risk of unemployment and loss of income, and should therefore be transparent and monitored in the context of the European Semester, in cooperation with the social partners.
  • The Coronavirus Response Investment Initiative and the suspension of the SGP: It is essential that these new resources properly address the urgent needs of the actors fighting the COVID-19 outbreak and CEEP welcomes the commitment of the EU institutions to a fast track approach for adoption and implementation. Beyond the immediate emergency, the challenge ahead lies in dealing more constructively with fiscal consolidation whilst keeping debt levels at sustainable levels.
  • The role of the European Central Bank: The ECB is providing a comprehensive financial protection shield for Europe and the Euro area in this sense. However, the ECB cannot act alone and there is an urgent need for an EU fiscal policy and a solidarity between Member States to further materialise in order to properly tackle this crisis.