Below is the latest edition of our daily Europe coronavirus update. Please do not hesitate to contact us if you want to discuss any of the countries mentioned in more detail.
Graph of the day
With most European countries going into lockdown mode, public opinion data suggests citizens are increasingly following their governments’ recommendations. Some differences across countries can be observed, however. Whereas a large majority of the population in Spain, Italy, and France says it is avoiding crowded public places, in Germany and the UK the population appears more divided – although in Germany the last data is from 16 March, and public opinion could have changed since then. The number of people avoiding going to work is even lower in these countries. In Spain and Italy, two countries under a strict nationwide lockdown, only around half of the population avoided going to work as of the date of this tracker’s last update (five days ago). In the coming days, the issue of when (and how) to exit the current lockdown is likely to become increasingly politically contentious. Governments will face a difficult trade-off between limiting the potential economic damage and protecting the population from the pandemic.
Eurozone
As previously discussed, the introduction of so-called coronabonds remains unlikely to result from tonight’s Eurogroup call. Instead, the provision of credit to multiple countries under an Enhanced Conditions Credit Line (ECCL) still appears to be the most realistic scenario. This would have the advantage of paving the way for ECB bond purchases under OMT, but without singling out individual member states. However, designing conditionality for the unique medical emergency will be tricky (and could create political backlashes if mishandled). Whether all these issues can already be settled in time for the 26 March European Council call remains to be seen, especially as ECB action last week has bought governments additional time.
Italy
The already poorly informed domestic debate about the European Stability Mechanism (ESM) has become particularly toxic in the wake of the Covid-19 outbreak and Prime Minister Giuseppe Conte’s suggestion that the EU should use the fund’s full firepower to confront the continent economic crisis. Under attack from the co-ruling Five Star Movement and right-wing opposition parties, Conte has been forced first to deny that he floated the idea of Italy asking for ESM help during the recent European Council videocall. Facing additional pressure over the past few days, Conte’s line now is that the ESM with its existing rules is not a suitable option for Italy. To overcome domestic concerns that ESM support would lead to a loss of national sovereignty and tough obligations, Rome’s preferred but unrealistic preference is financial support with no conditionality to the economies hit by the coronavirus outbreak.
Spain
The government has approved today the first EUR 20bn tranche of the EUR 100bn in loan guarantees for businesses it announced last week. However, cabinet in-fighting has continued to intensify in the last days, delaying the adoption of additional measures to counter the economic effects of the pandemic. The disagreements revolve around the contours of two measures: a solution to help certain households cope with rent payments, and a minimum income scheme. The potential temporary suspension of rent payments for vulnerable individuals is being debated, which could be accompanied by measures to support specific landlords. A minimum income scheme for those who cannot benefit from the support measures announced last week could also be adopted in the coming days. Meanwhile, Economy Minister Nadia Calvino said yesterday that she was against a complete lockdown given the economic damage it would entail.
France
Prime Minister Edouard Philippe announced yesterday that lockdown measures would be further toughened. In addition to the increase in fines for those ignoring confinement rules, fresh produce markets will be closed unless they are the only source of fresh produce in a municipality. Furthermore, people will only be allowed to go out to do sports or go out with children once a day and within a 1km radius. On the economic front, trade unions such as the CGT and FO, and opposition parties such as far-left France Unbowed and the center-right The Republicans are asking the government to stop all non-essential economic activities. However, the CFDT – France’s largest trade union – remains skeptical of the possibility of clearly defining what constitutes an essential activity, and the employer federation MEDEF is wary of the economic impact of introducing further restrictions.
Germany
Both houses of parliament, the Bundestag and the Bundesrat are likely to pass the government’s supplementary budget tomorrow, 25 March. This will pave the way for some EUR 750bn in economic support measures. The new budget foresees EUR 156bn in new borrowing, deviating the “back zero” policy of balanced budgets – at least for 2020. Although in quarantine, meanwhile, Chancellor Angela Merkel has tested negative for the virus. Multiple additional tests are to follow over the coming days.
United Kingdom
PM Boris Johnson has announced an effective lockdown for the country as the number of infections continues to climb. Last night’s statement, however, came after a comparably long period of waiting. For now, there is speculation about the degree to which these new instructions will be followed. With bold economic measures announced last week, and the lockdown now in place, the political focus might turn more squarely to the structurally strained health system’s capability of handling the looming surge in cases.
Greece
The government’s focus is on boosting the capacity of the beleaguered public health system. Health Minister Vassilis Kikilias said he expects an additional 2,145 staff (431 doctors and 1,714 nurses) to be deployed in the coming days. Amid complaints from health workers’ unions that public hospitals lack the resources to deal with a full-blown outbreak, Kikilias said that 2,158 hospital beds had been set aside for coronavirus patients and the number of ICU beds has been increased from 565 in January to 685. He also called for volunteers with medical or administrative experience, including medical students, to come forward.
Hungary
Yesterday, 23 March, the parliament failed to fast-track the adoption of the law extending the state of emergency. The bill proposes that decrees adopted by the government during this period would remain in force until the state of emergency is lifted. Currently, the legislation requires the parliament to ratify each decree every 15 days by a two-thirds majority. Since the ruling Fidesz already holds a two-thirds majority in parliament, the new legislation merely simplifies the governing procedures during the state of emergency. However, the most worrying aspect of the new bill is the severe penalties for spreading misinformation, which could help the ruling party silence its critics and independent media. The contentious bill will now be considered and likely passed by parliament during the first half of next week.
Poland
Today, 24 March, the United Right coalition government announced plans to enact new restrictions on public life. The new measures – which allow leaving one’s premises only under necessary circumstances such as shopping for food or going to work – should come into effect after their adoption in parliament on 27 March and remain in force at least until 11 April. Despite the additional restrictions, the ruling Law and Justice (PiS) party remains committed to holding the first-round presidential elections as scheduled on 10 May. The topic will likely gain considerable public attention in the coming days as each presidential contender must submit to the electoral commission at least 100,000 citizen signatures supporting their candidacy by Thursday, 26 March. The incumbent Andrzej Duda (supported by PiS) remains a clear front-runner, but the ruling party’s insistence of holding the poll amid considerable public health risks could backfire.
Turkey
The growing mismatch between the official coronavirus statistics in Turkey and the evidence coming from hospitals and health professions has accelerated the shift in the public mood from indifference to concern and now increasing panic. In a society already prone to conspiracy theories, it has also further fueled speculation about the virus’s origins and purpose. Before the confirmation of the first coronavirus case, polls reported that over 60% of the Turkish population believed that the coronavirus had been manufactured as a biological weapon. Pro-government media commentators reassured the public by saying that “Turkish genes” were the reason that there were still no cases in the country. As the hospitals have begun to fill with infected individuals, pro-government “health experts” have shifted the line by arguing that the Turks’ complex genetic makeup would ensure that they would be less affected than the population of any other country. AKP-friendly commentators have also argued that Covid-19 was created by feminists as it kills most men.
