Friday

5th Jun 2020

Coronavirus

Virus recovery talks should ditch old taboos: EU's Vestager

  • EU commission vice-president Vestager argues that digital and going green should be at the centre of rebuilding the EU economy

European Commission vice-president Margrethe Vestager said old solutions to the financial crisis are not relevant to the economic crisis created by the coronavirus and that EU countries should discuss recovery plans without taboos.

Vestager told a group of journalists on Friday (3 April) she was "deeply concerned" over the debate ensuing around the coronabonds.

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Southern member states such as Italy, France, and Spain waned to joint debt instruments to finance the economic fallout of the pandemic, while Nordic countries reset the idea fearing it would make southerners' loosen their finances.

Finance ministers are due to clash on Tuesday over different ideas how to share the burden of the economic shock.

"I think it is a very different situation from what we have ever experienced, we should give each other amnesty from the positions held during the financial crisis," she said.

"This crisis has nothing to do with moral hazard and risk taking [on the financial markets]," she said.

"It is very important that we prove that this is a EU, we are neighbours, and what you do with your neighbours is to help them in need," Vestager said, adding that it is important to have a discussion without taboos.

"It is important that we can discuss every idea on how to finance the recovery, without prejudice, without holding positions that may have been relevant in the financial crisis, but have no bearing when we are hit by something beyond human control, like a virus," Vestager said.

"We can only come out of this in a fast way if we help each other, otherwise it will take a very long time and the social consequences will be severe," she argued.

"It is important that we are not allowing a discussion about different tools to take us apart," she said.

"The virus is not a euro member, the virus is everywhere, it is important that the 27 countries come together," Vestager added.

She said that very likely old solutions will not be the tools that the EU needs to deal with the unprecedented problems it faces.

"We never had a situation where every business is affected in one way or another," Vestager pointed out.

State support

The former Danish minister of economy, who is in charge of competition and the EU's digital strategy, said it will take some time before businesses will be again able to do without state support.

"We will have to realise that recovery will be long," Vestager said,

The commission has rolled out a temporary framework for state aid rules that creates flexible ways for countries to put money into the economy.

She said the commission has the "ambition of coming back to an unfragmented internal market competition", but that it will take time.

"My expectations are all member states will have schemes [to help businesses] in place in relatively short time frame," she said.

Vestager said the commission was "neutral" on the ownership of the Alitalia airline, which the Italian government said it would nationalise it.

"Member states can buy shares in companies, it depends the way it is done, if done on market prices it is not a state aid issue," she said, adding that if a company was in trouble before the crisis you cannot be part of the temporary framework, but can compensate for damages suffered because of the outbreak.

Green, digital economy

Vestager, who is also responsible for the EU's digital strategy, said with lockdown measures many people have direct experience how digital media work, what are the benefits, and limitations.

"In that respect, we have a different baseline," she said of the digital strategy, arguing that it was more relevant than ever before.

Vestager said the EU will need to make use of the best of digital policy and going green when trying to recover from the outbreak and "the unprecedented economic crisis to follow".

She argued the EU should use the situation to make the most of the digital tools and make the green strategy its growth strategy, instead of trying to rebuild the old economy.

Vestager said the EU's seven-year budget will have to be different than what the commission tabled, and what EU presidencies have been working on.

She said the long-term budget can be help the EU to overcome the corona-related difficulties.

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The German chancellor warned that the only answer can be more Europe. However, disagreements countinue over how to rebuild the bloc's economy after the pandemic. Commissioner Gentiloni warned about the state's increased role.

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