The European Trade Union Confederation (ETUC), with the support of economists and personalities, has issued an appeal on the need of extraordinary macroeconomic measures to tackle the COVID-19 emergency. The ETUC is the major trade union organisation representing workers at European level
In its appeal, to European Institutions and governments, t the ETUC said, “our population is suffocating from the Corona COVID-19 virus, physically and economically. Nobody should have to choose between protecting themselves and their loved ones, or keeping their job and income, potentially putting themselves and others at risk.”
It expressed its fear that the tools and funds put now on the table by governments and European Union institutions will not be enough. The full use of the flexibility of the Stability and Growth Pact will be like drops in the ocean, if not accompanied by additional measures. The emergency clause of the Fiscal Compact must be activated.
It urged all financial institutions not to profit from this unprecedented health emergency and prevent an economic shock and recommended the rapid implementation of the following measures:
- Suspending stock exchanges immediately: after the unprecedented falls in stock markets all around the world, companies and workers will inevitably suffer and struggle to access credit.
- Decreasing the European Central Bank marginal lending facility rate to zero percent or less (presently at 0,25%), decreasing the interest rate on the main refinancing operations rate below -0,75%, and decreasing even further into negative territory the deposit facility (presently at -0,5%) to allow and incentivise banks to maintain economic activity.
- Make the European Central Bank really ready to do “whatever it takes”, meaning being ready to an unlimited reload of the ‘bazookas’ of the Outright Monetary Transactions and Quantitative Easing. As a complement, the European Central Bank capital key could be temporarily put aside for financial stability purposes, some Member States will be more in need than others.
- Prevent financial institutions from making loans at positive interest rates to both European Member States and small and medium sized businesses. Small and medium size enterprises are going to either stockpile, or stop their activities, and see their activities locked down if no additional support is provided. We ask all financial institutions, not only national promotional banks and the European Investment Bank, but also private banks, to be prevented from making interest on loans, to enable businesses to navigate until the end of the crisis. If this cannot be achieved by incentivises, governments must act by decree or/and ensure a guarantee at national level, to be backed at the EU level.
- The European Stability Mechanism must play a role in this regard, and we urge governments to make sure it can raise money at zero or negative interest rate and lend money to Member States, with the measures described above. Member States could moreover use the precautionary credit lines available under the European Stability Mechanism treaty, but without any conditionality.
- Additionally, the option of helicopter money from the European Central Bank should be seriously considered, to bypass a broken banking transmission mechanism, if needed, as a way to cope with the decrease in economic activity, support workers’ income and prevent deflation.
- Special measures should be taken for regulating price movements on vital products and housing, any abuses in this emergency should be severely condemned.
See full statement here