We call for more ambitious European measures to ensure solidarity and determination in the face of this unprecedented health and social crisis
The COVID-19 pandemic has been shacking our lives, our health, our societies and our economies. This unprecedented crisis questions the very essence of our structures, threatening public health, civil protection, economic and financial stability, regional and social cohesion, fundamental rights and rule of law, employment, sustainable development and the environment.
This pandemic is foremost a matter of public health and peoples’ lives and it highlights the need for a common European health policy, as part of the Social Europe ideal. At the same time, dark clouds of recession are looming, threatening our social and economic fabric.
To mitigate this impact, progressive leaders have called for a ‘Marshall Plan’ for Europe, which President von der Leyen seems to back. This plan requires all EU institutions acting decisively towards achieving this goal. The measures already taken by the Commission, the ECB and the EIB are first steps towards this direction but not enough. President Lagarde has already stated that EUR 1.5 trillion is needed for Europe to recover. Τhe Eurogroup announced on 8 April 2020 a package of up to EUR 540 billion, but the EU needs at least the additional EUR 1 trillion.
The EU financial ministers welcomed the initiative of the EIB Group to create a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion of financing for companies with a focus on SMEs, without any additional measures.
The Eurogroup also endorsed the new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), in the form of loans granted to Member States, of up to EUR 100 billion in total. The SURE proposal could be considered as a first step towards protecting jobs and workers, but it should fully guarantee workers’ jobs, salaries and labour rights, the loans should be granted on zero interest and its capacity should not be that limited.
Furthermore, the quantity of the SURE falls very short to face the costs of the temporary unemployment schemes that many Member States already have in place. This proposal cannot be the replacement of a real European Unemployment Benefit Reinsurance Scheme, as the SURE initiative is about loans to Member States and not about grants and it will not work as macroeconomic stabiliser for future crises.
The proposal to establish a temporary Pandemic Crisis Support, based on the existing ECCL precautionary credit line, with standardised terms agreed in advance by the ESM Governing Bodies and on the basis of up-front assessments by the European institutions, is also clearly insufficient. Its capacity is limited only to 2% of the euro area Member’s GDP, which amounts to around EUR 240 billion in total. Its scope seems also limited, focusing only to the support of domestic financing of direct and indirect healthcare, cure and prevention related costs due to the COVID-19 crisis.
Finally, the Eurogroup was unable to agree on the specifics regarding the Recovery Fund,. Discussions on the legal and practical aspects of such a fund, including its size, relation to the EU budget, its sources of financing and on innovative financial instruments were left to the guidance of the European Council.
We, the undersigned members of the Progressive Caucus in the European Parliament, call for more solidarity, higher ambition and decisiveness against the coronavirus crisis and urgently call for the following measures to be taken:
- A reinforced MFF 2021-2027 with increased funding for cohesion, climate, food and health policies is needed to address the actual impact of the crisis, as well as an increase of own resources ceiling of at least 2 per cent. In the meantime, we call for a reoriented MFF Contingency Plan that will not just prolong the last year of the current MFF but will substantially mitigate the impact of the pandemic.
- The newly announced Recovery Fund should be financed by the issuance of long maturity (even perpetual) EU bonds, it should make grants to the Member States based in an allocation key and should have a sufficient amount to ensure recovery of at least 1,5 trillion as suggested by experts.. The Recovery Fund should operate within a higher MFF and additional own resources (CCCTB, ITF, C02 tax, ECB profits, etc.), in order to finance the New Marshall Plan and the Green Deal, thus both funding the economic and social recovery and tackling the climate crisis. It shoud be clear that the Recovery Fund will provide grants, and not loans, in order not to further increase the debt of Member States.
- Τhe euro area Member States should be able to use the remaining ESM capacity of more than EUR 400 billion to support and restart the economy with zero-interest credit lines. This should in no way be attached to austerity related conditions, as such a punitive approach would be economically self-defeating and ethically deplorable. Moreover, such credit line should be made available to all euro area Member States on equal conditions to avoid any related stigma.
- The ECB should commit to act as the lender of last resort for member states. Its sovereign bond-buying programmes must be unconditional, and based on the spending needs of the Member States.
- The ECB should repurpose its quantitative easing policies, in particular its corporate sector purchasing programme, to significantly increase its direct support to SMEs and the EIB must be used to its maximum potential to provide funds to micro and small businesses, both conditional on the businesses’ commitment to the full protection of employment, rights and income.
- The ECB should also transfer money directly to all Eurozone households, with progressive taxation applied to the extra income, in order to avoid deflation and restart private consumption, while alleviating poverty.
- The SGP escape clause should apply beyond one year, until the second round effects of this crisis are over. There is also a strong need for a legal revision of the EU economic governance framework in order to provide for a genuinely counter-cyclical framework, and allow for direct financing of the EU and national governments by the ECB in extraordinary circumstances.
- The Conference on the Future of Europe should be the chance to involve citizens in the European debate and for reforming the Treaties in order for the EU to be better prepared for future threats and challenges.
Finally, we call on the Commission to come up with its proposal before the 23 April 2020 meeting of the European Council. It is time to meet the real needs of our societies and our economies with ambition and solidarity and lead a just, inclusive and sustainable way out of the crisis.
Dimitrios PAPADIMOULIS (Greece, GUE/NGL)
Ernest URTASUN (Spain, Greens/EFA)
Raphaël GLUCKSMANN (France, S&D)
Manon AUBRY (France, GUE/ NGL)
Domènec RUIZ DEVESA (Spain, S&D)
Tilly METZ (Luxembourg, Greens/ EFA)
Emmanuel MAUREL (France, GUE/ NGL)
Damien CARÊME (France, Greens/ EFA)
Konstantinos ARVANITIS (Greece, GUE/NGL)
Monika VANA (Austria, Greens/ EFA)
Sylvie GUILLAUME (France, S&D)
Helmut SCHOLZ (Germany, GUE/ NGL)
Aurore LALUCQ (France, S&D)
Petros KOKKALIS (Greece, GUE/NGL)
Nora MEBAREK (France, S&D)
Eric ANDRIEU (France, S&D)
Stelios KOULOGLOU (Greece, GUE/NGL)