ECB Is Criticized for Too Little Action as Europe Grinds to Halt
France ordered the closing of nurseries, schools and universities from the beginning of next week.
(Bloomberg) -- French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte took a rare swipe at the European Central Bank after its bid to tackle the fallout from the coronavirus failed to calm jittery markets.
The stimulus package announced by ECB President Christine Lagarde falls short of what’s needed to tackle the unfolding crisis, the two leaders said late Thursday. The virus has infected more than 17,000 people in Europe and killed in excess of 1,000 in Italy, the epicenter of the outbreak.
“The ECB today shared its first decisions,” Macron said in a national address from the Elysee Palace. “Will they be enough? I don’t think so.” Conte said that the task of the ECB is “not hindering but facilitating” and that the institution needs to create “favorable financial conditions.”
In a bid to limit the economic damage wrought by the virus, the European Commission will present a set of measures later on Friday and national governments are also moving ahead with plans to address the crisis. German Finance Minister Olaf Scholz and Economy Minister Peter Altmaier will give a news conference in Berlin at which they are expected to outline proposals to help companies in Europe’s biggest economy weather the storm.
German Chancellor Angela Merkel said late Thursday that the government has enough leeway to reconsider its pledge for a balanced budget should extraordinary circumstances demand it.
The Italian government may approve initial spending of as much as 16 billion euros ($17.9 billion) on a stimulus package, newspaper La Stampa reported. The cabinet is expected to approve Friday the first part of a package totaling about 25 billion euros, with measures including help with temporary layoffs, delayed tax payments and compensation for companies whose sales been hit.
In Belgium, schools, restaurants and bars will close as of midnight Friday, as the country goes on an Italian-style lockdown, allowing only groceries and pharmacies to keep functioning without restrictions. European Union institutions in the Belgian capital have also suspended all non-critical meetings.
Austria urged its traveling citizens to come back home and stay there, declaring the rest of the world unsafe in an unprecedented travel warning.
The country is on track to turn its budget surplus into a deficit as measures to contain the virus raise spending while the economic slowdown weighs on revenue. Municipal elections in two provinces were called off and more measures to clamp down on public life are expected to be announced later on Friday.
Asian stocks pared losses Friday but most benchmarks remained in the red, with investors worried that emergency fiscal and monetary packages won’t be enough to stave off a recession.
Bank of France Governor Francois Villeroy de Galhau defended the ECB’s measures, saying in a radio interview Friday that they are “powerful” and “coherent.”
Lagarde said it will take time for the package to be analyzed and appreciated by the markets. She urged governments to form “an ambitious and coordinated fiscal policy response” and called for “decisive and determined” action by finance ministers as soon as Monday when they meet in Brussels.
--With assistance from Tim Ross, Piotr Skolimowski, William Horobin, Naomi Kresge, Ruben Munsterman, Geraldine Amiel, Joao Lima, John Follain, Nikos Chrysoloras and Boris Groendahl.
To contact the reporters on this story: Ania Nussbaum in Paris at anianussbaum@bloomberg.net;Alessandro Speciale in Rome at aspeciale@bloomberg.net;Patrick Donahue in Berlin at pdonahue1@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Benedikt Kammel, Iain Rogers
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