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The above information does not constitute the provision of investment, legal or tax advice. When quoting please cite “Deutsche Bank Research”. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. The Commission published a proposal yesterday for a European unemployment reinsurance scheme of up to EUR 100 bn that will be discussed in the Eurogroup meeting on April 7 and should support short-time work schemes such as the German “Kurzarbeit” or Italian “Cassa Integrazione” and similar measures. This includes highly controversial proposals such as a joint issuance of "corona bonds" that are heavily rejected by several “frugal” members, including the Netherlands, Scandinavians but also Germany. The fallout of the financial crisis can still be felt in several EU countries as leaders try to find consensus on unprecedented measures to counter the economic shock caused by the corona crisis. EU leaders failed last week to agree on a plan for an additional common EU-level response. With Brexit, it lost one of its largest members and major proponent of the interests of the group of Northern members, damaging the political balance within the EU. The COVID-19 crisis hits Europe at a time, where the Union, despite all efforts to stand more united against the mounting global challenges, is growing further apart. Major disruptions at border checkpoints would therefore have severe consequences for the flow of goods within the EU, including essential goods and healthcare equipment.Įuropean Commission, 2019 Annual report on intra-EU labour mobilityīeyond the immediate supply chain and broad economic consequences of border restrictions, the reinstallation of intra-European borders could have a lasting impact on the European Union as a whole.
Traffic jams at neuralgic border crossings can rapidly add up to significant delays across the EU as the bloc’s economies have become increasingly interconnected and interdependent. Road transport accounts for the bulk of inland shipments (75%) within the EU. Some EU economies are particularly exposed due to their strong trade and value chain linkages. Exports and imports between members account for almost 45% of the bloc's GDP.
The level of border restrictions will be a determinant for the economic fallout of the crisis. EU economies are strongly integrated both in terms of value chains and trade. But how hard members’ economies will be hit strongly depends on the length of their lockdowns and aggregate countermeasures taken. The crisis will take a severe toll on the world and EU economies. No one knows how long current measures to fight the spread of COVID-19 need to be left in place.
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