EU struggles to contain corona economic fallout

"It is time to support our economies with determination, […] we need to focus on investing whatever is necessary to have the economy going on further," she added.

Eurozone finance ministers at a Monday videoconference tasked the bloc's bailout fund, the European Stability Mechanism (ESM), worth €410bn and set up after the 2008-09 financial crisis, to consider ways of tackling the economic fallout of the outbreak.

"We will do whatever it takes and more to restore confidence and support a recovery," the president of the eurogroup, a gathering of finance ministers, Mario Centeno said after the six-hour online meeting.

"We will protect our citizens and our currency. Come what may and with everything we have got," he said.

Ministers have, for now, stayed clear of specifically calling for ESM to have a role in dealing with the crisis.

The use of the EU's rescue fund could be premature, some argue, and could only aggravate the crisis.

"The debate whether we have to deploy the ESM comes too early," German finance minister Olaf Scholz told the Handelsblatt newspaper.

The use of its precautionary credit lines would also have to be approved by national parliaments, which fiscally conservative countries could be reluctant to do.

Ministers have so far agreed fiscal measures worth 1 per cent of GDP, on average, for 2020 to support the economy, and committed to provide liquidity facilities of at least 10 per cent of GDP, consisting of public guarantee schemes and deferred tax payments, their statement said.

They also endorsed a proposal by the commission to grant "maximum flexibility" of fiscal and state aid rules rules, and endorsed a commission plan for €37bn to be redirected from EU funds.

The allocation of those funds have already been set and does not necessarily correspond with the the worst-hit areas by the virus.

Ministers backed a commission and European Investment Bank proposal to mobilise up to €8 billion of capital lending for 100,000 European firms.

Earlier, socialist group leader in the European parliament, Iratxe Garcia in a letter to eurozone finance minister called for the establishment of a Covid-19 Economic Recovery Plan, that would include the European Central Bank, the ESM, and the European Investment Fund.

'Economic war'

The EU and the eurozone are both expected to fall into recession this year due to the outbreak.

The commission said it would publish its estimation on the economic impact in May, but industry commissioner Thierry Breton said Monday that the negative impact could be 2-2.5 percent.

"We are at war with the virus. An economic war," he was quoted as saying by Reuters.

The outbreak has threatened global supply chains, as several EU countries have sealed off their borders.

"We have kilometres of road congestion at certain border crossings," a commission spokesman said.

The EU executive has been telling member states on keeping borders open for goods.

It put forward plans on Monday how to secure a steady flow of goods as people around Europe have been stockpiling on goods, and other essentials.

The airline industry is also taking massive hit.

Major airlines such as British Airways, Ryanair, easyJet and Air France-KLM scaled-back their operations drastically, while others, for instance Austrian Airlines have suspended all their flights until later in March.

In the meantime, an aviation consultancy, the Centre for Aviation, warned that the international airline industry will collapse by May, putting hundreds of thousands of people out of work, unless countries are prepared to inject billions of dollars into it now.

'Whatever it takes'

The European Investment Bank will mobilise up to €40bn to fight the corona virus and called on EU governments to set up further guarantee for SMEs.

"The pandemic is also having a devastating economic impact which is already showing," EIB President Werner Hoyer said in a statement.

"Europe needs a 'whatever it takes' moment in the coronavirus response," he said.

International Monetary Fund (IMF) managing director Kristalina Georgieva also urged robust global action.

Georgieva suggested that coordinated action is required on the scale of the 2008-2009 financial crisis when in 2009 alone, the G20 countries deployed about two percent of their GDP in stimulus.

On Monday 20 additional countries have asked about receiving aid from the global lender as the coronavirus pandemic halts economic activity.