Coronavirus: Merkel to take emergency action as German economy on brink – shockwave in EU

The veteran leader has signalled she is prepared to scrap Berlin’s long-standing balanced-budget policy to help alleviate the financial costs of the viral outbreak. The federal government has triggered emergency measures to allow for a spending deficit to keep the economy propped up. Coronavirus is considered one of the “exceptional circumstances” under the constitutional debt brake applied by Berlin.

Germany has flirted with recession in recent months due to a massive slowdown in production, some of which was blamed on Brexit and global trade tensions.

Leading forecasters have said its economy is set to enter recession “with all certainty” in the first half of the year.

Mrs Merkel has so far resisted calls from Washington and the European Central bang to loosen the purse strings to help boost the European Union’s largest economy.

She said the German government would do “whatever is necessary” to combat any economic fallout triggered by the coronavirus outbreak.

“We will not ask ourselves every day what this means for our deficit. This is an extraordinary situation,” Ms Merkel added. 

Her country has been less impacted than fellow EU countries Italy and Spain, but has entered into crisis mode.

Visits to the historic Reichstag dome have been banned and top-flight football matches are playing being behind closed doors.

The Christian Democratic Union have even postponed their party conference, which was due to be used to elect Mrs Merkel’s potential successor.

The European travel ban to the United States announced by Donald Trump has also sparked fears amongst German airlines.

Last year over two million German national visited the US, the most trips taken by European Union citizens.

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Representatives from EU airlines have warned they face an industry collapse unless urgent help from governments and Brussels.

Thomas Reynaert, managing director at Airlines for Europe, said: “To be clear, airlines will continue to look after our passengers and our staff as best as we can under the circumstances — but immediate action to alleviate the impact of this crisis on our sector is greatly needed.

“It is also vital that any national measures proposed by third countries to support their national industries do not undermine the competitiveness of European airlines or otherwise disadvantage EU aviation.”

The European Commission is set to roll out a package of financial plans to counter the negative affects of coronavirus on the economy.

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Airline bosses have called on Commission President Ursula von der Leyen to scrap a “use it or lose it” legislation enforced on airlines for their allocated airport slots.

Airlines for Europe said: “Such a waiver should be valid for the duration of the summer season and requires swift passage in both the European Council and the European Parliament.”

The ECB’s Christine Lagarde last night warned of a “major shock” to the economy triggered by coronavirus.

She said: “An ambitious and coordinated fiscal policy response is required to support businesses and workers at risk.”

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