Europe prepares piecemeal coronavirus shutdown

Tedros Adhanom Ghebreyesus, director-general of the World Health Organization said there are now more than 118,000 cases in 114 countries, and 4,291 people have lost their lives, and described the outbreak as a "pandemic" for the first time on Wednesday.

The current epicentre of the European crisis, Italy, already went under national lockdown on Monday, and introduced further restrictive measures on Wednesday, shutting down all businesses except for supermarkets and pharmacies.

Several EU countries have introduced partial travel bans, shut down schools, banned large gatherings, sports events, closed cinemas and theatres across Europe.

Among other EU countries, Denmark, Greece, Romania, Poland, Hungary, the Czech Republic, Malta stepped up their efforts to contain the spread.

Austria has introduced border checks with Italy and Slovenia on health grounds for 10 days, and Hungary said it would reinstate border checks — essentially a suspension to the Schengen passport-free travel area there.

The EU Commission said reintroducing border checks need to be based on scientific advice, and should be proportionate and coordinated.

Most member states at a videoconference of border authorities on Wednesday reported measures at border crossing points aimed at identifying risk passengers, temperature screening, a commission official said.

Merkel warned that in Germany around 60-70 percent of the population is likely to be infected, which means around 58 million people.

Czech prime minister Andrej Babis later criticised the chancellor, accusing her of spreading panic with the figure.

Germany was also criticised on Wednesday also for banning exports of medical protective gear.

Hungary's minister for the prime minister's office, Gergely Gulyas, said that 120,000 masks ordered by Hungary are stuck at the port in Hamburg due to the ban.

He added that at Tuesday's EU teleconference several leaders criticised Merkel for the export ban. On Wednesday, Romania also announced such a ban, joining the Czech Republic and France.

The EU executive said it is analysing the restriction. Industry commissioner Thierry Breton discussed with the health care industry ramping up production of masks and medical devices "as far as possible and as quickly as possible", a commission spokesman said.

Italian prime minister Giuseppe Conte and EU commission president Ursula von der Leyen issued a joint statement on Wednesday calling for "any restrictive measure by member states to be first discussed at the European level, so that vital supplies go where they are needed most, the internal market functions properly and any unjustified obstacle is avoided"

Economic shock

Economic fears also grow as more and more EU governments are taking restrictive measures to stop the spread of the virus.

European Central Bank (ECB) president Christine Lagarde warned EU leaders on Tuesday that they could see the repetition of the economic shock following the 2008 financial crisis if they don't act urgently.

The ECB is expected to announce measures on Thursday to moderate the economic fallout.

On Wednesday, the Bank of England cut interest rates by half a percentage point to 0.25 percent and announced measures to support bank lending ahead to help Britain's economy against the coronavirus outbreak.

Merkel suggested breaking with the government's "black zero" policy of not taking on any new debt, a long-standing German political taboo. "It is a special situation. We will do what is necessary," she said.

Italy's government has approved an extraordinary allocation of €25bn to bolster the economy.

The commission's €25bn fund to help European economies, announced on Tuesday, comes down to the reshuffling of some of €7.5bn EU subsidies already allocated to EU countries, commission spokespeople revealed on Wednesday.

Member states that have not spent the pre-financing given by the EU, which normally they would be required to give back, could use it as national co-financing for more EU subsidies to tackle the economic fallout.

However, it can be used by the countries where those funds have already been allocated, which are not necessarily the most effected areas.

The official proposal of the commission will be ready by the end of the week.

The EU executive also promised flexibility on state aid rules, and fiscal rules to give room for manoeuvre for member states to fight the economic consequences of the virus.

In the meantime, in Brussels the European Parliament will go into a virtual shut down next week, as staff were asked to work from home except for one and a half day per week.