COVID-19

How Europe can support its economy as the COVID-19 outbreak grows

Victoria Craig Mar 11, 2020
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The European Central Bank benchmark rate already sits at a record low of -0.5%. Thomas Lohnes/Getty Images
COVID-19

How Europe can support its economy as the COVID-19 outbreak grows

Victoria Craig Mar 11, 2020
The European Central Bank benchmark rate already sits at a record low of -0.5%. Thomas Lohnes/Getty Images
HTML EMBED:
COPY

Six weeks ago, the European Central Bank was optimistic about the eurozone economy thanks to improving business sentiment, recovering global trade and a de-escalation in U.S.-China trade tensions.

But that was before the COVID-19 outbreak.

Last week, the Federal Reserve stunned markets with an emergency half a percentage point rate cut, and central banks in Japan and the U.K. vowed to take part in a coordinated global effort to support financial markets and maintain economic stability.

On Thursday, the ECB will decide whether to commit to that promise, too.

But economists have warned there’s little scope for the central bank to act since its benchmark rate already sits at a record low of -0.5%.

Aside from further slashing rates into negative territory, investors say the bank could expand the asset purchase program it restarted last year, or provide new lending systems for small businesses hit by coronavirus disruption.

President Christine Lagarde has said the ECB is “ready to take appropriate and targeted measures” to address the crisis. She just may need to dig deeper in her monetary policy toolbox to find the right recession fighting fix.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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