The second wave of coronavirus in Europe will create a new round of economic crisis in the EU, writes economist Thomas Mayer in his article for the German Die Welt. The economic consequences of the pandemic could go very far and will be comparable to those of wars, and in addition, this time the EU will not have the necessary growth drivers to pay off its debts, which threatens the Eurozone with inflation and bankruptcy.
As Mayer writes, a new round of crisis in southern Europe will require even more government aid. Thus, the ECB will have to re-engage in the issue of coronavirus bonds.
As far as the economic consequences of the pandemic are concerned, they could go far beyond the shaky finances and the excess money available to finance public debt, says Meyer.
After the Napoleonic Wars, England managed to get out of debt through the industrial revolution, after the Second World War the USA economically supported Europe and helped it to recover, but after the pandemic the EU countries will not have such growth incentives. The Eurozone is threatened by inflation and bankruptcy.
As Mayer points out, if politicians could think strategically, then the EU would already be offering options for currency reform.
However, inflation is still the only real instrument for financing debt.