In times of crisis caused by COVID-19 outbreak, commonly known as the Coronavirus, the EU Commission is calling for solidarity and Europe-wide coordinated solutions that come as a solution to halt the major economic shock.
Although many economic areas have been already severely impacted/damaged, the EU Commission hopes for a temporary deterioration of the economy, possible only if Member States implement all measures recommended at Union and national level, such as national security screening and other security related instruments.
In this respect, each Member State needs to live up to its full responsibility and mitigate at all costs the risks of the coronavirus shock. Saving lives by ensuring supplies and investments in treating the pandemic, insurance of and protection of the workers against income losses and keeping economic chains alive are key priorities.
Ensuring solidarity in the Single Market must be a key objective in order to ensure that essential goods, with a special focus on goods used to mitigate health risks, can be reached by all European citizens in need. Measures adopted by certain Member States regarding unilateral national restrictions to the free movement of supplies can only act as a barrier in the management of the COVID-19 outbreak. Not only that such restrictions can lead to a domino effect that forces states to adopt measures as a response to them, but also determine a disruption in the distribution chains with multiple negative effects that reinforce internal borders.
However, certain derivations from Single Market rules may be allowed only under strict conditions aimed at protecting the health of people, by notifying the Commission with regard to any restriction concerning the access to medical and protective equipment.
Liquidity measures must also be considered in order to offer support to small and medium enterprises that, at these times, are mostly affected. For this purpose, the EU Commission is preparing a plan that implies liquidity deployment from the EU budget in order to support 100,000 European small and medium enterprises. These measures are intended to be promoted within the existing instruments of European Investment Funds Programs and the possibility of granting working capital loans with an extended maturity.
A special attention is brought to the power of national banks that play a key role in dealing with the effects of the COVID-19 outbreak. In this respect, banks must have liquidity to lend their customers in order to maintain an adequate flow of credit to the economy. Therefore, governments are allowed and encouraged to provide support if banks have difficulties of such nature.
Employment measures must be encountered in order to protect workers from loss of income or even unemployment. The EU is already offering support through EU structural funds including the Coronavirus Response Investment Initiative.
Although a deterioration of the economic and social dimension cannot be avoided, the European Commission encourages all Member States to have a responsible approach in order to contain the COVID outbreak and to limit its overall impact. The main fiscal response will come from Member States’ national budgets using the full flexibility of the European fiscal framework. In such difficult times, bold coordinated decisions are necessary and all states need to act transparently and jointly.
This piece of information is brought forward by the attorneys at law of Zamfirescu Racoți Vasile & Partners.