Italy Struck by Deadliest Day as Virus Prompts Industry Shutdown
Germany Drops Deficit Dogma as Deaths Surge in Italy, Spain
(Bloomberg) --
Italy suffered its worst day of coronavirus deaths and shut down almost all industrial production for 15 days, with the pandemic dealing blow after blow across an entire European continent in lockdown.
Prime Minister Giuseppe Conte said late Saturday that Italy will temporarily halt all non-essential business activity as the country of 60 million faces its biggest challenge since World War II. Supermarkets, pharmacies, banks and post offices and other essential businesses will stay open, he said.
”Stay home, we don’t have a choice,” he told Italians in a televised address.
After overtaking China as the most deadly center of the outbreak, Italy alarmingly reported 793 deaths on Saturday, raising the total to 4,825 as hospitals overflow and health-care workers die. The country is fast running out of solutions — social and economic — to contain the catastrophe.
It’s not alone: the death count in the U.K. and Spain also surged.
Prime Minister Boris Johnson, who was initially reluctant to embrace a large-scale shutdown, warned Britons they can’t expect to be spared: “The numbers are very stark, and they are accelerating. We are only a matter of weeks — two or three — behind Italy.”
Desperate Times
With no end in sight to the carnage, Europe is increasingly on a war footing after restrictions on society that would have seemed outlandish just weeks ago failed to bring down death rates. Italy, a founding European Union member that’s survived its share of political and financial upheavals, is once again on the brink in an EU besieged by its latest crisis.
Conte’s measures to contain the spread of the virus mirror initiatives taken by the Lombardy region, the epicenter of Italy’s outbreak and its economic heart. Regional leaders have urged the central government to take tougher action, often imposing their own measures before officials in Rome acted.
As the human toll mounts, governments are increasingly throwing out the rulebook to counter the economic impact. Germany, long a holdout on deficit spending, pledged new debt worth almost 4.5% of its economic output. Unprecedented U.K. measures include helping pay people’s wages. The U.S. administration is floating the possibility of about $2 trillion in stimulus.
Like Europe’s debt crisis a decade ago and the politically divisive influx of refugees that began in 2015, unified leadership has been in short supply. Helmed by an inexperienced team of EU commissioners in Brussels, the bloc did agree to close its outside borders as a way to protect visa-free travel within the EU.
Merkel’s Moment
The focus turns now to Angela Merkel, the German chancellor with debt-crisis experience, who’s holding emergency talks with state leaders on Sunday to discuss further restrictions on public life. She also looks set to end years of balanced budgets.
Finance Minister Olaf Scholz said on Saturday that Germany is pledging more than 150 billion euros ($160 billion) in new debt to help small companies cover overheads and aid to low-income earners. Merkel is considering a state of emergency, which would allow her government to ask parliament to set aside the German constitution’s limits on public debt.
Merkel has been preparing Germans for the possibility of sweeping shutdowns like those imposed in Italy and Spain, telling them “you need to take it seriously.”
Berlin, the capital, on Saturday joined Bavaria and other German states in announcing further restrictions on public movement ahead of Sunday’s meeting.
Unprecedented Steps
With cafés, bars and pubs now closed, the U.K. government is falling in line with the trend toward restrictions on social gatherings to curb the spread of the virus. But in the economic sphere it is going much further than its cohorts with a radical set of measures that include the state paying up to 80 percent of a worker’s wages.
In Spain, Prime Minister Pedro Sanchez warned the nation on Saturday to expect a further increase in deaths. The country is entering the second week of a state of emergency that has confined most people to their homes with police patrolling the streets to enforce the lockdown. Reported deaths rose by 324 on Saturday to 1,326, about twice the pace recorded the previous day.
Most people in Spain “have never had to face something as harsh this,” Sanchez said in an address.
©2020 Bloomberg L.P.