In response to the economic fallout from the coronavirus pandemic and lockdowns, the European Union is combining the firepower of national capitals with that of the 27-country bloc’s own institutions. The overall value of fiscal and monetary support on offer, combined with access to trillions of euros of cheap loans and new EU-level funding still under debate, will amount to over 10 trillion euros. While an impressive headline figure, that total will include money that has been already allocated in some way, and offers of loans that may ultimately not be taken up.
Europe’s stabilising power
Institutions and member states of the European Union are putting together trillions of euros in loans, fiscal and monetary support to help the regional economy weather the novel coronavirus’ pandemic shutdowns.
€3.6 trillion
Across Europe, national governments work individually to tailor domestic policy for national citizens. Notably, they are sovereign when it comes to setting their own health and fiscal policies.
€1.3 trillion
In Brussels, decision-making in the EU is shared between three institutions: the European Commission, the European Parliament, and the European Council, which is the forum where leaders of the 27 members meet to formulate decisions.
€5.4 trillion
In Frankfurt, the ECB is the central bank of the 19 EU member states which have adopted the euro. The ECB maintains price stability in the eurozone using interest rates in its monetary policy decisions.
governments €3.6 trillion
EU €1.3 trillion
ECB €5.4 trillion
Across Europe, national governments work individually to tailor domestic policy for national citizens. Notably, they are sovereign when it comes to setting their own health and fiscal policies.
In Brussels, decision-making in the EU is shared between three institutions: the European Commission, the European Parliament, and the European Council, which is the forum where leaders of the 27 members meet to formulate decisions. All three will decide on the final shape of corona relief measures.
In Frankfurt, the European Central Bank is the central bank of the 19 EU member states which have adopted the euro. The ECB maintains price stability in the eurozone using interest rates in its monetary policy decisions.
National governments €3.6 trillion
EU €1.3 trillion
ECB €5.4 trillion
Across Europe, national governments work individually to tailor domestic policy for national citizens. Notably, they are sovereign when it comes to setting their own health and fiscal policies.
In Brussels, decision-making in the EU is shared between three institutions: the European Commission, the European Parliament, and the European Council, which is the forum where leaders of the 27 members meet to formulate decisions. All three will decide on the final shape of corona relief measures.
In Frankfurt, the European Central Bank is the central bank of the 19 EU member states which have adopted the euro. The ECB maintains price stability in the eurozone using interest rates in its monetary policy decisions.
€3.6 trillion
Across Europe, national governments work individually to tailor domestic policy for national citizens. Notably, they are sovereign when it comes to setting their own health and fiscal policies.
€1.3 trillion
In Brussels, decision-making in the EU is shared between three institutions: the European Commission, the European Parliament, and the European Council, which is the forum where leaders of the 27 members meet to formulate decisions.
€5.4 trillion
In Frankfurt, the ECB is the central bank of the 19 EU member states which have adopted the euro. The ECB maintains price stability in the eurozone using interest rates in its monetary policy decisions.
National governments €3.6 trillion relief
EU €1.3 trillion relief
ECB €5.4 trillion monetary support
Across Europe, national governments work individually to tailor domestic policy for national citizens. Notably, they are sovereign when it comes to setting their own health and fiscal policies.
In Brussels, decision-making in the EU is shared between three institutions: the European Commission, the European Parliament, and the European Council, which is the forum where leaders of the 27 members meet to formulate decisions. All three will decide on the final shape of corona relief measures.
In Frankfurt, the European Central Bank is the central bank of the 19 EU member states which have adopted the euro. The ECB maintains price stability in the eurozone using interest rates in its monetary policy decisions.
The overarching aim of the relief effort and subsequent recovery plan is not just to restore economies to their state from before the pandemic, but to transform them to be more in line with the EU’s agreed strategic goals of not emitting more CO2 into the atmosphere than is absorbed, and for digitising the economy.
Outbreaks across Europe affected different economies in different ways, and the bulk of relief will go to the EU countries and regions hardest hit by the COVID-19 pandemic.
Governments keep economies a float
Every EU country will have to employ a slightly different strategy to revive and transform its economy over the coming years. But the general aim is to use this recovery to make economies not only greener and more digital but also more resilient to future shocks, which means investment in health service, research and development and changes to pension systems.
As of July 2, EU national governments have announced an estimated 3.6 trillion euros in support measures including state aid.
€3.045 trillion national liquidity schemes
Meant to keep companies and banks alive when lockdowns kill off revenue for businesses who in turn cannot service loans they took from banks.
€575 billion national fiscal relief
Money is spent on, for example, temporary tax cuts, handouts to families, financial incentives to buy certain goods, tax deferrals, social security deferrals or subsidies, income subsidies, etc
€3.045 trillion national liquidity schemes
Meant to keep companies and banks alive when lockdowns kill off revenue for businesses who in turn cannot service loans they took from banks.
€575 billion national fiscal relief
Money is spent on, for example, temporary tax cuts, handouts to families, financial incentives to buy certain goods, tax deferrals, social security deferrals or subsidies, income subsidies, etc
€3.045 trillion national liquidity schemes
Meant to keep companies and banks alive when lockdowns kill off revenue for businesses who in turn cannot service loans they took from banks.
€575 billion national fiscal relief
Money is spent on, for example, temporary tax cuts, handouts to families, financial incentives to buy certain goods, tax deferrals, social security deferrals or subsidies, income subsidies, etc
€3.045 trillion national liquidity
Meant to keep companies and banks alive when lockdowns kill off revenue for businesses who in turn cannot service loans they took from banks.
€575 billion national fiscal relief
Money is spent on, for example, temporary tax cuts, handouts to families, financial incentives to buy certain goods, tax deferrals, social security deferrals or subsidies, income subsidies, etc
€3.045 trillion national liquidity schemes
Meant to keep companies and banks alive when lockdowns kill off revenue for businesses who in turn cannot service loans they took from banks.
€575 billion national fiscal relief
Money is spent on, for example, temporary tax cuts, handouts to families, financial incentives to buy certain goods, tax deferrals, social security deferrals or subsidies, income subsidies, etc
Germany, France and Italy — Europe’s largest economies — have designed relief packages specific to each national crisis.
Germany
€100
€200
€300 billion
Other measures
VAT & other tax relief measures
Energy and climate fund
Self-employed, small firms
Small-and-medium sized companies
Hospitals capacities
Struggling towns
Public unemployment insurance
Fight outbreak
Public health system
Deutsche Bahn
France
€100
€200 billion
Tax relief
Furloughs
Tax credits
Bailout big companies
Other measures
Healthcare
Small firms
Italy
€100 billion
Other measures
Furloughs
Health svc & civil protection
Tax relief
Germany
€100
€200
€300 billion
Other measures
VAT & other tax relief measures
Energy and climate fund
Self-employed, small firms
Small-and-medium sized companies
Hospitals capacities
Struggling towns
Public unemployment insurance
Fight outbreak
Public health system
€310
total
Deutsche Bahn
France
€100
€200 billion
Tax relief
Furloughs
Tax credits
Bailout big companies
Other measures
Healthcare
€137 billion total
Small firms
Italy
€100 billion
Other measures
Furloughs
Health service & civil protection
€75 billion total
Tax relief
Germany
€100
€200
€300 billion
Other measures
VAT & tax relief measures
Energy and climate fund
Self-employed, small firms
Small-and-medium sized companies
Hospitals capacities
Struggling towns
Public unemployment insurance
Fight outbreak
Public health system
€310 billion total
Deutsche Bahn
France
€100
€200 billion
Tax relief
Furloughs
Tax credits
Bailout big companies
Other measures
Healthcare
€137 billion total
Small firms
Italy
€100 billion
Other Measures
Furloughs
Health service & civil protection
€75 billion total
Tax relief
Germany
€100
€200
€300 billion
Other measures
VAT & other tax relief
Energy and climate fund
Self-employed, small firms
Small-and-medium sized companies
Hospitals capacities
Struggling towns
Public unemployment insurance
Fight outbreak
Public health system
Deutsche Bahn
France
€100
€200 billion
Tax relief
Furloughs
Tax credits
Bailout big companies
Other Measures
Healthcare
Small firms
Italy
€100 billion
Other Measures
Furloughs
Health svc & civil protection
Tax relief
Germany
€100
€200
€300 billion
Other measures
VAT & other tax relief measures
Energy and climate fund
Self-employed, small firms
Small-and-medium sized companies
Hospitals capacities
Struggling towns
Public unemployment insurance
Fight outbreak
Public health system
€310 billion total
Deutsche Bahn
France
€100
€200 billion
Tax relief
Furloughs
Tax credits
Bailout big companies
Other measures
Healthcare
€137 billion total
Small firms
Italy
€100 billion
Other measures
Furloughs
Health service & civil protection
€75 billion total
Tax relief
Germany has agreed to two rescue packages including everything from emergency support for companies to a cut in VAT and support for infrastructure and housing investment. France has guaranteed corporate borrowing and announced additional aid for workers and the tourism sector. Italy, one of the first epicenters of the pandemic, has offered liquidity and loans to companies and approved 75 billion euros of extra borrowing to help families and firms.
EU sets up safety nets
In the short term, EU governments have agreed on three safety nets at the EU level to protect sovereigns, businesses and individuals against the impact of the coronavirus pandemic on the economy.
Governments €240 billion
For those countries that might need to borrow a lot, the euro zone will offer a very cheap, almost no-strings-attached credit of up to 2% of a country’s GDP as benchmark, with the possibility of making it bigger if needed.
Businesses €200 billion
Thanks to increased guarantees from EU governments, which own the European Investment Bank (EIB), the EIB will create a pan-European shield to guarantee lending with a focus on small and medium-sized enterprises.
Individuals €100 billion
The European Commission will borrow on the market, against EU governments guarantees, to cheaply raise and subsidise wages of workers in EU regions hit by the pandemic.
Governments €240 billion
Businesses €200 billion
Individuals €100 billion
For those countries that might need to borrow a lot, the euro zone will offer a very cheap, almost no-strings-attached credit of up to 2% of a country’s GDP as benchmark, with the possibility of making it bigger if needed.
Thanks to increased guarantees from EU governments, which own the European Investment Bank (EIB), the EIB will create a pan-European shield to guarantee lending with a focus on small and medium-sized enterprises.
The European Commission will borrow on the market, against EU governments guarantees, to cheaply raise and subsidise wages of workers in EU regions hit by the pandemic.
Governments €240 billion
Businesses €200 billion
Individuals €100 billion
For those countries that might need to borrow a lot, the euro zone will offer a very cheap, almost no-strings-attached credit of up to 2% of a country’s GDP as benchmark, with the possibility of making it bigger if needed.
Thanks to increased guarantees from EU governments, which own the European Investment Bank (EIB), the EIB will create a pan-European shield to guarantee lending with a focus on small and medium-sized enterprises.
The European Commission will borrow on the market, against EU governments guarantees, to cheaply raise and subsidise wages of workers in EU regions hit by the pandemic.
Governments €240 billion
For those countries that might need to borrow a lot, the euro zone will offer a very cheap, almost no-strings-attached credit of up to 2% of a country’s GDP as benchmark, with the possibility of making it bigger if needed.
Businesses €200 billion
Thanks to increased guarantees from EU governments, which own the European Investment Bank (EIB), the EIB will create a pan-European shield to guarantee lending with a focus on small and medium-sized enterprises.
Individuals €100 billion
The European Commission will borrow on the market, against EU governments guarantees, to cheaply raise and subsidise wages of workers in EU regions hit by the pandemic.
Governments €240 billion
Businesses €200 billion
Individuals €100 billion
For those countries that might need to borrow a lot, the euro zone will offer a very cheap, almost no-strings-attached credit of up to 2% of a country’s GDP as benchmark, with the possibility of making it bigger if needed.
Thanks to increased guarantees from EU governments, which own the European Investment Bank (EIB), the EIB will create a pan-European shield to guarantee lending with a focus on small and medium-sized enterprises.
The European Commission will borrow on the market, against EU governments guarantees, to cheaply raise and subsidise wages of workers in EU regions hit by the pandemic.
The safety nets are of a scale and reach unseen before the EU. All renewable energy, climate-friendly and digital-related investments will be first to benefit from the EIB’s lending. Countries will be able to get cheap loans and no longer need to agree to a major and usually painful reform program.
Inspired by the longstanding German “Kurzarbeit” scheme, the short-term work scheme provides full wages — part paid by the company and in part by the government. It means that workers are not pushed into unemployment so that they are ready to increase working hours as soon as there is more demand.
EU looks down the road
EU capitals are looking to agree on the terms of a Recovery Fund that is meant to help finance a European economic rebound once the pandemic is over and to help make the recovery more even across countries. It is this proposal that will form the basis of debate at the July 17-18 summit.
The total 750 billion euros is to be borrowed by the European Commission on the market using the Commission’s AAA rating to get the money as cheaply as possible. It would then be made available to the 27 EU countries in coming years.
Grants €500 billion
Since the money was initially borrowed on the market, it would still have to be repaid by the EU. Earlier proposals for which included a carbon border tax, a plastics tax or a financial transactions tax.
loans €250 billion
The loans would be long-term, meaning member states have some time to pay back into the EU coffers. EU Budget Commissioner Johannes Hahn has suggested that the repayment of these loans could generate €1.5 trillion of investment for the EU.
Grants €500 billion
Since the money was initially borrowed on the market, it would still have to be repaid by the EU. Earlier proposals for which included a carbon border tax, a plastics tax or a financial transactions tax.
loans €250 billion
The loans would be long-term, meaning member states have some time to pay back into the EU coffers. EU Budget Commissioner Johannes Hahn has suggested that the repayment of these loans could generate €1.5 trillion of investment for the EU.
Grants €500 billion
Since the money was initially borrowed on the market, it would still have to be repaid by the EU. Earlier proposals for which included a carbon border tax, a plastics tax or a financial transactions tax.
loans €250 billion
The loans would be long-term, meaning member states have some time to pay back into the EU coffers. EU Budget Commissioner Johannes Hahn has suggested that the repayment of these loans could generate €1.5 trillion of investment for the EU.
Grants €500 billion
Since the money was initially borrowed on the market, it would still have to be repaid by the EU. Earlier proposals for which included a carbon border tax, a plastics tax or a financial transactions tax.
loans €250 billion
The loans would be long-term, meaning member states have some time to pay back into the EU coffers. EU Budget Commissioner Johannes Hahn has suggested that the repayment of these loans could generate €1.5 trillion of investment for the EU.
Grants €500 billion
Since the money was initially borrowed on the market, it would still have to be repaid by the EU. Earlier proposals for which included a carbon border tax, a plastics tax or a financial transactions tax.
loans €250 billion
The loans would be long-term, meaning member states have some time to pay back into the EU coffers. EU Budget Commissioner Johannes Hahn has suggested that the repayment of these loans could generate €1.5 trillion of investment for the EU.
The hardest hit countries and industries like airlines, hotels, restaurants and the tourist/hospitality sector in general will of course get support. Apart from that, the focus is on everything related to green, digital, and so-called resilience-boosting.
Grants
Loans
as proposed by the Commission
€50
€100
€150 billion
Italy
Spain
Poland
France
Greece
Romania
Germany
Portugal
Czech Republic
Hungary
Slovakia
Bulgaria
Croatia
Netherlands
Lithuania
Belgium
Slovenia
Sweden
Latvia
Austria
Finland
Estonia
Cyprus
Denmark
Ireland
Malta
Luxembourg
Grants
Loans
as proposed by the Commission
€50
€100
€150 billion
Italy
Spain
Poland
France
Greece
Romania
Germany
Portugal
Czech Republic
Hungary
Slovakia
Bulgaria
Croatia
Netherlands
Lithuania
Belgium
Slovenia
Sweden
Latvia
Austria
Finland
Estonia
Cyprus
Denmark
Ireland
Malta
Luxembourg
Grants
Loans
as proposed by the Commission
€50
€100
€150 billion
Italy
Spain
Poland
France
Greece
Romania
Germany
Portugal
Czech Republic
Hungary
Slovakia
Bulgaria
Croatia
Netherlands
Lithuania
Belgium
Slovenia
Sweden
Latvia
Austria
Finland
Estonia
Cyprus
Denmark
Ireland
Malta
Luxembourg
Grants will be allocated to countries according to a criteria “key” that includes their 2015-2019 unemployment and how badly a country’s economy has suffered, as measured by the hit to its GDP this year and next. Some 70% of the money will be spend in 2021 and 2022, the rest in 2023.
The whole principle of the Commission borrowing money on the market against EU government guarantees to give outright grants rather than loans takes the EU into new territory. If accepted, it would mean the EU accepting a joint debt for the first time and would be a step towards deeper integration and a fiscal union. This comes on top of the decision to suspend EU rules on national deficits to help fight the pandemic and loosen the EU’s state aid rules for companies.
ECB keeps cash flowing
For its part, the European Central Bank is going above and beyond the already unprecedented stimulus it has injected into the euro zone economy in the form of its existing asset purchases programme, known as quantitative easing. The so-called Pandemic Emergency Purchase Programme has a number of facets to it.
€3 trillion worth of loans
Available to banks, some of it at a rate as low as minus 1% if banks pass the cash onto the real economy.
buy up to €1.8 trillion worth of debt
Most of it government bonds, to soak up all of the extra borrowing required to keep the economy afloat during the pandemic.
Over €600 billion worth of buffers
The ECB’s supervision arm has relaxed capital buffer rules and asked banks to stop dividend payments or share buybacks.
buy up to €1.8 trillion worth of debt
Most of it government bonds, to soak up all of the extra borrowing required to keep the economy afloat during the pandemic.
€3 trillion worth of loans
Over €600 billion worth of buffers
Available to banks, some of it at a rate as low as minus 1% if banks pass the cash onto the real economy.
The ECB’s supervision arm has relaxed capital buffer rules and asked banks to stop dividend payments or share buybacks.
buy up to €1.8 trillion worth of debt
Most of it government bonds, to soak up all of the extra borrowing required to keep the economy afloat during the pandemic.
€3 trillion worth of loans
Over €600 billion worth of buffers
Available to banks, some of it at a rate as low as minus 1% if banks pass the cash onto the real economy.
The ECB’s supervision arm has relaxed capital buffer rules and asked banks to stop dividend payments or share buybacks.
€3 trillion worth of loans
Available to banks, some of it at a rate as low as minus 1% if banks pass the cash onto the real economy.
buy up to €1.8 trillion worth of debt
Most of it government bonds, to soak up all of the extra borrowing required to keep the economy afloat during the pandemic.
Over €600 billion worth of buffers
The ECB’s supervision arm has relaxed capital buffer rules and asked banks to stop dividend payments or share buybacks.
buy up to €1.8 trillion worth of debt
Most of it government bonds, to soak up all of the extra borrowing required to keep the economy afloat during the pandemic.
€3 trillion worth of loans
Over €600 billion worth of buffers
The ECB’s supervision arm has relaxed capital buffer rules and asked banks to stop dividend payments or share buybacks.
Available to banks, some of it at a rate as low as minus 1% if banks pass the cash onto the real economy.
Like regular households, banks can only borrow from the ECB if they post sufficient collateral. This is usually a marketable asset, like a bond. The ECB has lowered collateral rules so banks can borrow even against non-investment grade assets, expanding their capacity to borrow.
The ECB’s fresh measures are mainly targeted at businesses, including small and medium-sized enterprises who are at the biggest risk from the crisis. The difference compared to the 2008 financial crisis is that European banks now have significantly bigger buffers and access to nearly unlimited funding from the ECB at zero or even negative rates.
Europe braces for economic fallout
The COVID-19 pandemic is the latest big challenge for the EU after a debt crisis a decade ago, mass immigration in the mid-2010s and the trauma of Brexit. Some have even framed it as an existential dilemma. It remains to be seen whether the EU recovery effort will be enough to restore the regional economy to health, and whether it can compensate for the difference in scale between the national aid packages of the wealthiest EU members such as Germany, and those such as Spain, Italy and Greece with less funding at their disposal.
2Q 2020 estimated GDP, change from previous quarter
−20.4%
Croatia
−17.3%
Ireland
−14.3%
Hungary
−14.0%
Spain
−14.0%
Bulgaria
−13.7%
France
−13.6%
Italy
−13.0%
Slovenia
−12.7%
Estonia
−12.1%
Lithuania
−12.0%
Romania
−11.8%
Portugal
−11.5%
Belgium
−11.1%
Finland
−11.0%
Slovakia
−10.9%
Latvia
−10.5%
Germany
−10.0%
Netherlands
−9.7%
Denmark
−9.2%
Czech Republic
−8.7%
Austria
−8.7%
Poland
−7.7%
Sweden
Note: Data not available for Greece, Cyprus, Luxembourg and Malta
2Q 2020 estimated GDP, change from previous quarter
−20.4%
Croatia
−17.3%
Ireland
−14.3%
Hungary
−14.0%
Spain
−14.0%
Bulgaria
−13.7%
France
−13.6%
Italy
−13.0%
Slovenia
−12.7%
Estonia
−12.1%
Lithuania
−12.0%
Romania
−11.8%
Portugal
−11.5%
Belgium
−11.1%
Finland
−11.0%
Slovakia
−10.9%
Latvia
−10.5%
Germany
−10.0%
Netherlands
−9.7%
Denmark
−9.2%
Czech Republic
−8.7%
Austria
−8.7%
Poland
−7.7%
Sweden
Note: Data not available for Greece, Cyprus, Luxembourg and Malta
2Q 2020 estimated GDP
change from previous quarter
Croatia −20.4%
Ireland −17.3%
Hungary −14.3%
Spain −14.0%
Bulgaria −14.0%
France −13.7%
Italy −13.6%
Slovenia −13.0%
Estonia −12.7%
Lithuania −12.1%
Romania −12.0%
Portugal −11.8%
Belgium −11.5%
Finland −11.1%
Slovakia −11.0%
Latvia −10.9%
Germany −10.5%
Netherlands −10.0%
Denmark −9.7%
Czech Republic −9.2%
Austria −8.7%
Poland −8.7%
Sweden −7.7%
Note: Data not available for Greece, Cyprus, Luxembourg and Malta
EU Economy Commissioner Valdis Dombrovskis has acknowledged that the fall-out from the crisis will be greater than initially feared.
EU GDP, change from previous quarter
estimates
5%
0%
−5%
−10%
−15%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
EU GDP, change from previous quarter
estimates
5%
0%
−5%
−10%
−15%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
EU GDP, change from previous quarter
estimates
5%
0%
−5%
−10%
−15%
’05
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
’21
Sources: European Commission; European Central Bank; national governments; Eurostat
Reporting by Jan Strupczewski and Balazs Koranyi
Graphics by Michael Ovaska
Edited by Jon McClure and Mark John