During the month of March, while most of our eyes were fixated on the surging rates of cases of the COVID-19 pandemic, and how hospitals were portraying a near-apocalyptic scene, the Global Financial Market, including that of the European Union was facing an unprecedented downfall.
With most parts of the world, including the EU opting for a complete lockdown of their sovereign borders, and daily affairs, businesses have faced the worst, bringing the chaos near to that of the meltdown in 2008, or even the Great Depression of the 1930s.
In measures to avert the impending economic doom for small and medium enterprises and daily wage workers, the Central Bank of the European Union has made a timely intervention by sustaining the flow of credit for businesses to utilize for the most fundamental payments.
Who was hit the worst?
When the lockdown started to materialize, some sectors were hit really hard, intuitively because they worked on the mobility of people. Economic sectors such as retail, transport, tourism, catering, restaurants and broadly the services sector suffered huge losses, with millions of people filing for bankruptcy after losing their livelihoods.
The EU has predicted that the breath of life can slowly be instilled in the economy if the viral spread can manage to slow down, and for that necessary measures such as quarantining has been taken.
How EU Helped Cushion The Worst
In a nutshell, businesses run on credit. The parts of the economy that still operate such as mobile phone providers, warehouses and ISP, all need credit for wage payments. Credit can only exist if there is an optimistic promise of growth. After the onset of this global pandemic, the investor confidence has dwindled.
Amidst this crisis state intervention, through the EU Central Bank has become the most important liquidity factor to flatten the curve of financial panic, and maintain the flow of credit. The Central bank is now acting as a lender of last resort, by making loans, buying assets from banks and other businesses that are desperate for cash.
Furthermore, since a lot of Europeans work in the gig economy’s services sector, the state has also launched swift initiatives for them to self-isolate and work from home. The incentives extended to them include increased regulation of online trading platforms such as that of countries in Southeast Asia like the Philippines.
The EU has also taken emergency measures to cut wage bills. For example in Denmark, companies that are hit the worst by the Coronavirus are receiving state-sponsored aid to assist them in paying salaries.
Flattening the Health Infrastructure Curve
All these measures are uniquely beneficial to materialize the flattening of the health curve. Providing access to wage bills, credit, and increased online regulation prevents people from the worst impacts of the global pandemic and acts as a safety buffer until things return to normal.
These measures also mean that people are quickly self-isolating themselves. Their livelihoods are protected by the state so that the health infrastructure resources can be allocated without it capsizing under the wake of surging cases.
