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European Commission and Coronavirus strangle EU economy

UNITED STATES (OBSERVATORY NEWS) — The Commission’s last mistake gives a good idea of ​​what might go wrong in the government’s reaction to the outbreak of coronavirus.

The EU executive body believes that Europe’s economy is in serious decline, so it’s prudent to continue to insist on financial discipline.

This can be called an unusual sense of time. Soon, governments will be forced to increase government spending to cope with the economic consequences of what could lead to a serious supply shock. But the Commission is a supporter of long-discredited rules that look particularly unreasonable in the current environment.

The situation is getting worse: the vice-president of the Commission, Valdis Dombrovskis, said that next week an excess deficit procedure will be launched in relation to Romania, the deficit of which is “significantly higher than 3% of GDP”.

Here you need to pause. Romania has the worst healthcare system in Europe, according to most ratings. WHO puts it in 99th place (out of 100) in the ranking of health systems in the world. Before her are countries such as Benin, Iran, Algeria or even Libya.

On Wednesday, the EU executive body published a “winter package” of economic policy assessments and recommendations for 27 EU member states. This is a mixture of strategic statements and advice, as well as warnings for countries far from financial discipline, as well as praise to those who adhere to this line.

And for the European Commission there is nothing more important than threatening sanctions against the country, since its budget deficit does not comply with the rules …

Even more absurd, Dombrovskis a few minutes before trying to convince the European opinion that the Commission “monitors the effects of coronavirus on the economy.”

Perhaps this is not the time for a major coordinated fiscal stimulus on a pan-European scale. Disruptions in the supply chain amid an outbreak of coronavirus cannot be addressed through indiscriminate government spending.

But, as OECD chief economist Lawrence Boone noted on Wednesday, “the first line of action is spending in the health sector: providing a sufficient number of medical personnel, providing them with good salaries and protection.”

And if the warning of Dombrovskis Romania in ordinary times could make sense, now it sounds absurd. In the fight against coronavirus, it has become apparent that some countries will be more equitable than others.

The EU must clearly prioritize. Serious financial incentives may not yet be needed. But this is not a reason to force countries in need to cut critical spending.

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