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After strong GDP rebound, eurozone braced for fresh virus setbacks

Covid

The 19 eurozone countries fear that the second wave of coronavirus infections will wipe out the hard-won economic growth clawed back over the past few months, and see a swift conclusion of the EU recovery plan as a crucial safeguard.

“The recent acceleration in the spread of the Covid-19 virus and the new containment measures have further increased uncertainty and are likely to weigh on the recovery,” the currency area’s finance ministers warned on Tuesday in a joint statement after talks.

The stimulus fund and seven-year spending plan worth a combined 1.8 trillion euros (2.1 trillion dollars) should be “agreed and implemented as a matter of priority, allowing for a swift disbursement of funds in 2021,” the ministers said.

Last week, an official estimate showed that the eurozone economy rebounded by 12.7 per cent in the third quarter, following a dramatic slump in the previous months. But analysts across the board warn that the recovery is likely to be short-lived.

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Due to a fresh spike in cases, many EU countries have imposed new restrictions limiting public life with a harsh impact on the economy and countries’ budgets.

The recovery package – agreed by EU leaders in July – is still pending approval from the European Parliament, where lawmakers are pushing hard for more funds in some areas.

The eurozone ministers expressed confidence on Tuesday that EU lawmakers and the representatives of the 27 member states will come to agreement by the end of year.

The 19-country group already set up three short-term loan instruments worth 540 billion euros earlier this year, when the first coronavirus wave pounded Europe.

One of these, a fund of up to 100 billion euros for national furlough schemes, dispatched the first tranche of funds last week.

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