The eurozone was already in a weak state before the impact of coronavirus. Eurozone real GDP increased just 0.1 percent quarter on quarter and one percent year on year in the fourth quarter of 2019, resulting in its weakest performance in six years. Germany’s output was flat, while Italy and France suffered contractions.
IHS Markit expects the spreading virus to do serious damage to trade, travel and tourism and financial markets.
Italy is especially vulnerable, given its fragile economy, the high incidence of COVID-19, and resulting restrictions on activity.
As many economists wonder whether the coronavirus pandemic will be a rerun for Europe of the 2008 financial crash, in an interview with Express.co.uk, Maurizio Brucchi, a renowned Italian doctor who also served as Mayor of Teramo, claimed Brussels is plotting against Italy and using the coronavirus pandemic to sideline the boot-shaped country just like they did with Greece.
He said: “We trusted the EU – but they don’t think of us as their equals.
“Germany and France do not consider ourselves on their level
“They want us to end up like Greece. That’s their goal.
“And if they don’t do anything, we will.
“What Christine Lagarde said the other day is not accidental.
“She should have been removed from office after that.
“It doesn’t matter what Ursula von der Leyen said afterwards, trying to make up for it.
“We, Italians, do not feel European at the moment.”
Last week, European Central Bank (ECB) chief Christine Lagarde claimed it was not the Frankfurt-based authority’s role to “close the spread” in sovereign debt markets – referring to the gap between Italian and German bond yields that is a key risk indicator for Italy.
Ms Lagarde also rebuffed suggestions that she hoped to emulate Mario Draghi, her Italian predecessor as ECB president, saying that she did not seek to be “whatever it takes, number two”.
The remarks stirred fears the ECB was retreating from being a lender of last resort to Italy just as concerns intensified about the economic impact of coronavirus.
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Speaking to the ECB’s top decision-making body in a call on Friday, Ms Lagarde said she was sorry for comments that led to the biggest single-day fall in Italian government bonds in a decade, two people involved in the call told the Financial Times.
Unearthed reports suggest the EU might be indeed plotting to sideline Italy out of the eurozone.
According to a 2012 report by The Daily Telegraph, Germany drafted plans for Greece to default, potentially leaving the euro, as the EU had started facing up to the fact that the Greek debt crisis was spiralling out of control – with or without a second bailout.
Eurozone finance ministers met in Brussels to approve the next tranche of loans from the EU and the International Monetary Fund, designed to stave off national bankruptcy while the new Greek government was putting the country’s finances in order.
However, the severe austerity measures being demanded caused such fury in Greece, that Wolfgang Schäuble, the former German Finance Minister, did not believe that any government would have been able to implement them.
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According to the publication, his worries were brought into the open after a secret European Commission was published, in which Mr Schäuble claimed that even if Greece had made good on its promises, it would have not been enough to reach the target of bringing total debt to 120 per cent of GDP by 2020.
A eurozone official told the publication: “He just thinks the Greeks cannot do what needs to be done.
“And even if by some miracle they did what has been promised, he – and a growing group – are convinced it will not pull Greece out the hole.
“The idea instead is that the Greek government should officially declare itself bankrupt and begin negotiating an even bigger cut with its creditors.
“For Schäuble, it is more a question of when, not if.”
Greece did indeed come precariously close to toppling out of the eurozone in 2015 at the height of a debt crisis, which required lenders throwing the country a financial lifeline on three occasions.
Its fiscal progress is currently being monitored by the eurozone and the IMF, which together lent Athens more than €250billion (£232billion) during its decade-long debt crisis.
The Greek economy will grow only slightly this year due to the impact of the coronavirus, by little over 0 percent, Christos Staikouras told Greece’s ANT1 TV on Wednesday.
The country had previously estimated economic growth of 2.8 percent this year.
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