Merkel Quarantine Further Complicates Europe’s Virus Efforts

(Bloomberg) -- With German Chancellor Angela Merkel isolating herself, the effort to contain the spread of the coronavirus in Europe became even more complicated as leaders grapple with enforcing increasingly severe measures to control the pandemic.

After coming into contact with a doctor who later tested positive, the German leader will be forced to chair an emergency cabinet meeting Monday via video conference. The gathering is to sign off on a plan to borrow as much as 350 billion euros ($370 billion) to counter the economic impacts of the virus.

At the European Union level, finance ministers are expected to convene via video conference to sign off on temporarily scrapping budget rules. The move would pave the way for enormous spending to prop up economies and show citizens that their personal sacrifices will be worth it.

Merkel Quarantine Further Complicates Europe’s Virus Efforts

There’s “no limit” to how high France’s spending could go in the fight against coronavirus’s spread, Budget Minister Gerald Darmanin said in a French radio interview on Monday. “We need to protect our population.”

Italy, the epicenter of the crisis on the continent, is being dragged deeper into a recession after the outbreak that’s crippling its northern regions forced the government to ban almost all movement inside the country and shutter almost all industrial production.

The impact of virus on the economy will be strong even as measures by the European Central Bank and European governments help limit the intensity and length of the slump, Bank of Italy chief Ignazio Visco and Prime Minister Giuseppe Conte said in separate interviews in La Stampa newspaper.

“The European Central Bank has deployed a protective shield, now it’s up to European governments to go into battle and defend the economy,” Conte told La Stampa. “We’ll use all the tools which can help us start to run again.”

Merkel Appeal

In her final public appearance before going into quarantine, Merkel announced tighter nationwide lockdown measures, including limiting contact outside immediate family to no more than one person and restricting restaurants to take-out services. She renewed her appeal for people to reduce social contact.

Adherence to lockdown measures has been uneven in Europe, stoking concerns about containing the virus after a weekend that saw more than 2,000 fatalities in Italy and Spain.

In the Netherlands, the government may weigh further restrictions after images emerged over the weekend of locals taking advantage of the sunny weather by flocking to parks and North Sea coastal towns. In response, an official emergency alert was pushed out to mobile phones on Sunday, urging residents to maintain a distance of at least 1.5 meters (5 feet) between one another.

Closing non-essential stores is one of the options the government is looking at during a meeting later on Monday, Dutch newspaper De Telegraaf reported. The coalition government led by Prime Minister Mark Rutte has so far resisted calls from some opposition parties for a complete lockdown.

U.K. Prime Minister Boris Johnson also threatened “tougher measures” unless British people stop ignoring calls to avoid social gatherings. Spanish Prime Minister Pedro Sanchez, whose wife has tested positive for the virus, extended the state of emergency in his country for another two weeks.

Europe is discussing more aggressive collective action to prop up the economy. Bank of France Governor Francois Villeroy de Galhau called for emergency loans to states by the European Stability Mechanism rescue fund. European Central Bank Vice President Luis de Guindos said the EU should marshal a joint fiscal response this week.

Germany received the green light from EU regulators for subsidized loans to companies hit by the coronavirus pandemic. The approval by the European Commission in Brussels on Sunday covers two German programs to provide liquidity through development bank Kreditanstalt fuer Wiederaufbau.

This marked one of five commission endorsements over the weekend of national aid being permitted under a temporary looser EU rulebook, with France, Denmark, Italy and Portugal also getting clearances.

As Belgium weighs extending its lockdown for another eight weeks, there have been some signs of progress. Austria, which introduced lockdown measures similar to Germany’s a week earlier, has slowed down the spread of the virus significantly, according to Health Minister Rudolf Anschober.

“The measures we imposed are starting to work,” Anschober said in a statement Sunday, adding that the rate is still “way too high” to scale back restrictions.

©2020 Bloomberg L.P.

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