With 170 of the 189 Members of the IMF experiencing a drop in GDP, Europe in particular is bracing itself for the fallout after Covid-19 regresses.
Europe may experience a deeper recession than the rest of the world. Germany the largest EU economy is expected to shrink by 10% followed by France with more than 6%. This could be the worst recession since the great depression.
The ECB has unveiled huge stimulus plans by paying banks to ensure they keep lending. But it is clear that the EU is divided. Eurozone finance ministers were silent on the decision to share the debt burden of fighting the Coronavirus. This despote Germany offering to buy a trillion euros of debt to help reduce the cost of borrowing.
It all seems as though the EU is in a bubble of its own not grasping the full scale of what is happening around them whilst they juggle between internal Country issues and the EU’s directives for the group. Countries like Italy feel they were abandoned in their hour of need and hence more than 50% of the Italian population are urging to leave the EU.
Ursula von der Leyen recently appointed as the president of the European Commission has had a baptism of fire as she struggles to assert any leadership over the EU member states as they have largely ignored the EU directives in favour of internally devised models for controlling the outbreak in their individual Countries. She sees this as a problem that will be with the EU for a number of years to come and is appealing for additional investment in the form of a Marshall Plan for Europe.
The Marshall plan was a recovery program to get Europe back on its feet and put an end to Soviet expansionist goals. The US Secretary of State George C. Marshall, created the program and sent about $13 Billion of aid between 1948 and 1951 to Europe. Food, medicine, machinery, fuel, and investments to kick-start the European economy.
That would be the equivalent of around $142 billion today. Though the stimulus required runs in the trillions as collectivey the EU is talking over 3 trillion euros, there does not seem to be the likelihood of this kind of immense support for the EU forthcoming from the USA.
As von der Leyden continues to talk big, the effects on the ground are not so noticeable. This has created speculation that the EU is on its last legs, and could threaten the European project started in 1993, but can trace its origins to the Treaty of Paris in 1951 and the Treaty of Rome in 1957.