March 2020

‘Whatever it Takes:’ Why Urgent Fiscal Action is Key to Eurozone Success

In light of the recent COVID-19 outbreak and its impact on economic growth, Europe is faced with a clear and present danger of economic slowdown. But is it only COVID-19 that threatens the European economy? With central banks running low on ammunition, Chief Economist Alessandro Leipold calls for a Copernican Revolution in European policymaking. Fiscal policy – and the council of economic and financial affairs ministers who guide it – must step up and do “whatever it takes.” He proposes a five-point programme to shore up the European economy, including adopting a European unemployment benefit reinsurance programme, agreeing the Budgetary Instrument for Convergence and Competitiveness (BICC) mechanism, “embracing counter-cyclical fiscal stimulus centred on investment” and a putting a calculated end to indecision and meandering discussion.