Coronavirus pandemic crisis threatens eurozone’s survival: European Commission

A European Union flag flutters in front of a newly hung banner that reads "Coronavirus Global Response" in front of the European Commission building in Brussels, on May 6, 2020. (Photo by AFP)

The European Commission has warned that the coronavirus and the economic crisis that has ensued threaten the stability of the eurozone and risk its survival.

The commission said on Wednesday the EU economy will experience a recession of historic proportions in 2020 due to the coronavirus pandemic.

In its spring forecast, the commission forecasts that the eurozone economy will contract by about 8% this year.

“Growth projections for the EU and euro area have been revised down by around nine percentage points compared to the Autumn 2019 Economic Forecast,” according the report.

The commission repeated its call for a pan-European “recovery plan” to help compensate for diverging fiscal firepower between member states.

Noting that Europe is experiencing an economic shock unprecedented since the Great Depression,Paolo Gentiloni - European Commissioner for the Economy- said “Both the depth of the recession and the strength of recovery will be uneven, conditioned by the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country's financial resources.”

“Such divergence poses a threat to the single market and the euro area,” he added, stressing that a “decisive, joint European action” can mitigate that threat.

According to the commission, Greece, Italy and Spain will be the hardest-hit by the coronavirus crisis.

“In the absence of a strong and timely common recovery strategy at EU level, there is a risk that the crisis could lead to severe distortions within the Single Market and to entrenched economic, financial and social divergences between euro area Member States,” the report said.