The euro is facing significant pressure from the coronavirus as nations around the world struggle to contain the spread of the deadly disease. The virus, which originated in Wuhan, China, has now spread throughout Europe, with the continent now being named the epicentre of the outbreak. This came after China recently announced that its cases of the coronavirus had begun to slow down to a trickle, whilst cases in Italy, Spain, France and Germany continue to rocket. In response to the global threat, some countries within the Eurozone have gone into lockdown and have pledged to offer support to their citizens to help offset the damage caused by the spread of the deadly disease. The market is now worrying for the outlook of the single currency as the spread of the disease could see a breakdown in the 19-nation Eurozone.
Eurozone Under Pressure From Spread of Coronavirus, Who Names It the New Epicentre of Virus
EUR investors are beginning to fret over the future of the eurozone following comments from the World Health Organisation (WHO) earlier in the month which identified Europe as the new epicentre for the COVID-19 virus. With Europe experiencing new cases at a higher rate than anywhere else in the world. Countries such as Italy, France, Spain and Belgium are in lockdown in an effort to prevent the virus spreading further, which is dramatically hurting their economies. Support for the euro is beginning to slip after weeks at the top due to investor demand from a collapsing stock market.
Investors Look for Significant Eurozone Stimulus Package Which Is yet to Show Face
The euro area has so far failed to deliver a massive fiscal stimulus package like that of the United States. Earlier this month, President Donald Trump signed a $8.3 billion emergency spending bill to deal with the coronavirus and on Tuesday, reports indicated that the White House was considering a fiscal package of more than $1 trillion.
However, though the eurozone as a whole hasn’t announced a stimulus plan, euro countries have individually announced fiscal stimulus programs. For example, Italy has promised a 25-billion-euro ($27.26 billion) rescue plan and France said it will deploy 45 billion euros to mitigate the impact of coronavirus on businesses, among other measures.
Eurozone discusses potential action, but not everyone is on the same page
European leaders discussed briefly on Tuesday, the possibility of issuing euro bonds to provide financial support during the coronavirus crisis. Euro bonds are a highly sensitive issue because they would technically group debt from, for example, Italy and Germany, in one bond. Countries that are more fiscally sound do not want to have their debts associated with those of highly indebted nations.
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