Financing the Corona Crisis in Europe

– Hans-Bernd Schäfer

On the 9th of April, after two days of negotiations on a European financing programme to deal with the Corona crisis the finance ministers of the euro area agreed, amongst other things, on a line of credit provided by the European Stability Mechanism (ESM). All furtherreaching proposals from France, Italy and Spain, but also from many respected economists in Germany, are thus off the table for the time being. Nevertheless, the German government has succeeded in presenting this as a breakthrough in European solidarity. The headlines of the world press spoke of a line of credit of 240 billion euro. According to Politico on April 10 “The ESM will make €240bn available in spending for indebted countries.” The Süddeutsche Zeitung already titled “240 billion from rescue aid” on March 25. On the homepage of the German government it says “The Eurogroup has agreed on a 500 billion euro protection program.” This indirectly puts the ESM loans at EUR 200 billion.

To read about the outcomes of this, click here.