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COVID-19 Is an Opportunity for Europe

The European Union has always advanced on the back of crises. In this sense, the COVID-19 outbreak could represent a chance for the EU to create a powerful crisis-management mechanism, which pools members’ resources and channels them toward a coordinated fiscal policy.

LONDON – For years, fears have been mounting that a “black swan” would test the European Union’s crisis-management capabilities. With the outbreak of the COVID-19 coronavirus, those fears have come to pass – and it is not at all clear that the EU will be able to withstand it.

The COVID-19 epidemic is not just any stress test. For starters, it is likely to affect the entire world, leading to a synchronized growth slowdown or even recession. Synchronized recessions are virtually always deeper and longer-lasting than downturns affecting individual economies, and they hit open economies like the EU particularly hard.

Compounding the problem, because every EU member state is facing a severe shock, they will be far less able to help one another than they were during the eurozone crisis that began in 2010. To be sure, Italy has suffered the most so far. But past transmission patterns elsewhere suggest that COVID-19 will continue to spread across Europe, putting every country under growing strain.