FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. REUTERS/Yves Herman/File Photo
PARIS (Reuters) – The European Union is heading this year towards a 5-10% economic contraction due to the new coronavirus outbreak, EU Industry Commissioner Thierry Breton said on Friday, adding that figure could get worse if “things don’t get better”.
In an interview with France 2 television channel he also said he was optimistic about European leaders eventually working out the details of the trillion emergency fund they agreed upon Thursday.
“As of today, in the European Union, we’re on course for a 5% to 10% (recession), meaning it’s about 7.5%. But that is today, and if things don’t improve and if we have a second peak (of the outbreak), things could get worse”, Breton said.
“Everything hinges on the speed of the economic recovery. We’re still in the midst of the pandemic and we’re going to learn to live with it for several months.”
Europe is facing its worst economic shock since World War Two from the spread of COVID-19, the respiratory disease caused by the coronavirus, which has also led to border closures across the bloc and left member states fighting over medical supplies.
Finding the means to support the economy have reopened bitter divisions between northern, richer EU countries and Mediterranean members of the bloc, which are also the hardest hit by the pandemic.
But Breton said sums necessary to relaunch the economic activity are so huge that everybody will end up agreeing on the details.
“Germany doesn’t have the first penny to finance its own plan. It will have to borrow. Same thing for the Netherlands. And for France. Everyone will need an emergency type fund”, he said
“And then, I think they will all agree, all the heads of states and governments, to define the details of this fund. We’re going step by step but we’re making progress.”
Reporting by Benoit Van Overstraeten; Editing by Kevin Liffey and Emelia Sithole-Matarise