The EU has responded forcefully to the economic crisis brought about by COVID-19. The ECB’s aggressive easing and exceptional national fiscal stimulus measures have been complemented by unprecedented action at the EU level, thereby providing extensive support to vulnerable member states and broadening fiscal space.
Exigent circumstances justify exigent measures. But while responding strongly and effectively to the imminent risk of something resembling the euro crisis, the COVID-19 measures risk leaving the EU more vulnerable in the longer run. While explained as exceptional and temporary, they transform the EU into an incomplete fiscal union, which is fragile in the face of future shocks. These measures need to be balanced with strengthened market discipline and – ultimately – backed up by clear divisions of competence, unambiguous assignment of responsibility, and efficient decision-making structures.
BERLIN (Reuters) - A planned reform of the euro zone's bailout fund poses substantial risks for Germany's state budget, its federal audit office says .
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The COVID-19 pandemic has caused an unprecedented economic shock of high human costs and deep social repercussions. Unprecedented steps to mitigate the impact of the crisis were taken.