The euro area and EU member countries in general are gradually entering the peak of the evolution of the crown in line with the stages initially followed by Italy in dealing with this coronavirus. A period of three to five weeks is the important stage of the climax of the pandemic that will determine whether Italian situations will start to appear in the other EU member countries, with tens of thousands of cases.
All EU member countries make titanic efforts to strengthen and directly staff any potential of their health systems in order to better limit and better address the extent of this pandemic. It is certain that the months of April and May will be critical and difficult for both EU citizens and the public health systems of its member countries.
by Thanos S. Chonthrogiannis
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The EU Public health systems and the nightmare of Coronavirus
Given this difficulty many European leaders, with German Chancellor Angela Merkel prominent, speak openly to the public of their countries preparing them for the highest rates of cases they expect to appear in the populations of their member countries. Chancellor Angela Merkel said up to 70% of Germany’s population could be sicked by this virus.
Several cases, and always based on statistical data, are estimated at about a rate of cases of about 5% of the total number of cases hospitalized with severe form of coronavirus pneumonia. This percentage increases in linear or exponential depending on the total number of cases will require at least three weeks of ICU hospitalisation (Intensive Care Unit), thereby depleting the capacity of the health systems (public and private) of EU member countries.
These developments will therefore determine at least until the summer if not for the whole year where the largest volume of public expenditure (towards public health systems and not only) will be directed and how annual state-budgets of the euro area and EU member countries equally will be redesigned in general.
Photo by World Health Organisation website and vitamindwiki.com site
With regard to the administrative piece for the coordination of the effective response of coronavirus in the Eurozone and the EU, EU Commission President Ursula Von de Leyen was late to react, perhaps because she has focused on the implementation of the announced commitments for the first hundred days of her Presidency.
The ‘inscrutable’ committee set up by its mandate can monitor the issue of coronavirus but ‘remotely’ since it meets once a week. A more functional and effective solution would be to appoint a Special Commissioner coordinator with the tasks of coordinating all European agencies and governments for the common purpose which is none other than the effective treatment of the pandemic of coronavirus in EU.
The Ever-Changing Economic Planning and Uncertainty respectively
These findings show us that there are ever increasing needs to finance public health systems with funds to be found from the state budgets of the euro area member countries and the EU in general.
US President Donald Trump’s decision to cut off air transport with the EU and the UK gives the signal of an uncontrolled pandemic causing spreads in Eurozone benchmark government bonds to increase further, particularly those concern Italy.
The economic developments that create the new framework in the euro area and the EU are summarised as follows:
1. The Eurozone due to a drastic fall in consumption and the disruption of production sectors is heading for recession for the Q2 and Q3 quarter of 2020.
2. The EU is gradually entering a phase that is being isolated commercially and economically from the US and China.
3. An increase in public expenditure on public health systems and increased capital for subsidies to businesses and their employees affected by any suspension and curtailment of their work is necessary.
4. A drastic reduction in state tax revenues from consumer taxes for all euro area and EU member countries equally.
5. The implemented monetary policy in the Eurozone is helpless as its potential and its effects on the growth of the euro area economy through artificial inflationary pressures have been exhausted.
6. Failure to coordinate and formulate a common resounding fiscal policy throughout the Euro area.
7. The drastic reduction in consumption and periodic cessation of production due to the restrictive measures imposed to limit the transmission of coronavirus will put strong pressure on the whole range of businesses in the Eurozone and the EU which next will be transferred to euro area and EU banks respectively.
8. Creating a problematic investment climate due to the high level and prolonged dysfunction of large enterprises, postponing existing investments and limiting business travel to promote investment.
9. Strong pressure on EU member countries, especially the Eurozone, which are the weak links in fiscal terms to the Eurozone economy due to high public and private debt.
10. Difficulty transporting goods and providing services as euro area and EU member countries close their borders with Italy and neighbouring member countries with them.
11. Strong turbulence in the labour markets of the euro area and the EU respectively. The milder measure to limit the spread of the virus that directly affects labour markets is work from home (teleworking), while even more difficult solutions will be applied to labour markets including measures such as forced leave, holidays paid and unpaid pay equally, rotating work with broken hours-schedule, changes of contracts from full-time to part-time and reduced salary and redundancy fee.
The only pleasing fact is that the German government through German Federal Finance Minister Olaf Scholz has announced the provision of a fiscal support package of €500bn for the German economy that will be channeled into the economy through the state-owned KfW bank.
These new economic difficulties are predicted to be of a strong nature with a prolonged duration and can lead to social and political problems, particularly in member countries facing structural problems in their economy.
The question posed to scientists around the world is how long the crisis and escalation of the coronavirus epidemic will last in order to bring everyone back to normality.
