European Employment Down As ECB Push Recovery Fund

Figures released by Eurostat have shown the Eurozone employment rate dropped -0.2% over Q1 2020. This was in line with expectations but only accounts for a small proportion of time in lock-down. With over 40 million people across Europe enrolled on government-backed furlough schemes, there are still concerns over mass unemployment later in the year.

The data follows a stark warning from European Central Bank President Christine Lagarde yesterday, who was speaking at the European Parliaments Economy and Monetary Affairs Committee. She implored member states to urgently adopt the proposed ‘Next Generation EU’ €750 billion recovery plan or face “negative spill overs” in the markets and increase the costs of overcoming the recession.

The second phase of the European Commission Covid-19 financial package contains €500 billion in non-refundable grants. In order to finance the recovery fund, the EU would borrow an unprecedented amount in the markets which has led to some of the more frugal member states apposing such a scheme as it would make the cost of borrowing higher for everyone.