Eurozone economic ministers have reached a momentous agreement to deal with the immediate recessionary effects of the coronavirus pandemic. By approving a support package for half a trillion euros, exempt from untimely austerity conditions, they have compensated their initial hesitations with a set of measures of sufficient amount, at least from the outset. It awaits both its ratification by the European Council and the design of the (even more arduous) reactivation package after the paralysis, which will require joint debt instruments.
The importance of this package lies first and foremost in its Community character, which goes beyond the individual national responses offered by the Member States. It supposes the practical assumption, in public policies —and by whom corresponds, the institutions—, of what was sustained in the declarative field: that this crisis affects everyone, it presents an exorbitant size and, consequently, that only can be overcome by joining efforts.
Actions speak louder than words. The amount of the package is substantial. It is true that the partners had launched unilateral budgetary measures, totaling more than three trillion euros. Its defect does not lie in its amount, not negligible, but in its dispersed order: simultaneous, but not coordinated.
This is what the Eurogroup is precisely trying to solve. Super soft loans from the Stability Mechanism and new loans and guarantees from the European Investment Bank reach half a trillion euros. It is a sufficient amount to support the sudden increase in the indebtedness of the Member States in the markets, and ensures and multiplies the effectiveness of the three trillion already committed. This is the added value of the European contribution: the response to the indebtedness of each State is thus more solid, and therefore credible.
In addition, for the first time a rudiment of common fiscal policy is activated before the worst of a crisis in public finances – unlike the Great Recession – and largely preventive, has been unleashed. At the same time, an anti-cyclical social policy bet is being tried thanks to the bet of a European unemployment reinsurance. The use of all the instruments of economic policy is also embodied in an unprecedented way: the governments finally agree not to leave monetary policy alone, they accompany it with an expansive fiscal strategy. Clear that under the leadership and the anticipation of that one. Not surprisingly, in the last hours, while the economic ministers haggled to the unspeakable, the ECB expanded its package against paralysis, lowering the required guarantees (the so-called collaterals) to avail itself of its extensive credits.
It is also fair to recognize the key role this time played by the German coalition government led by Angela Merkel. It is enough to compare this time its effective work of mediation, pressure and channeling of the Governments that rejected the package, with the misgivings that Berlin exhibited in the past to conclude that, with debate, anguish and ups and downs, it is the whole of Europe that begins to learn from past lessons. And its costs.