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Giorgos Papakonstantinou Former Greek Financial Minister has fired a stark warning saying a member of the EU could all be dragged into a “very deep recession”. This comes as EU member states can’t agree on Emergency measures to sure up and safeguard economies that are struggling due to the coronavirus pandemic.
Speaking to CNBC, Mr Papakonstantinou said: “It’s important to realise that this is a bigger shock than the eurozone crisis.
“It’s symmetric, and it hits everyone, it hits most sectors. The sudden shock isn’t confined to a few industries, it hits all over the economy, and it hits the entire eurozone and indeed the EU as a whole.
“It’s incredibly likely that you will have most EU countries and eurozone countries having a deep recession.
“You won’t just have Greece going to minus 8, minus 9 per cent as it did in 201, you have a lot of EU countries, perhaps the entire eurozone, going to this kind of numbers.”
The Greek economist insisted members states could be pushed into adopting a unilateral approach resulting in significant splits among the EU27.
Mr Papakonstantinou continued: “This is not something we have seen before, everyone is in this challenging situation and not just a few countries having a problem. Therefore, it’s a challenge of proportions we have not seen before.
“National governments are attempting to mitigate the impact with a host of measures. The problem is that some can afford it, and some cannot.
“Germany’s unlimited guarantees to companies is not something every other country can do.”
He added: “So the question arises, how can we face this in a way where everyone comes out stronger at the other end or, at least, with as minimal an economic damage as possible.
“Here the ECB has bought us all some time with it’s €750 billion pandemic emergency purchase of securities which is, in fact, more than €1 trillion if you count the announcements previously made, but that’s not going to be enough.
“There needs to be a European response.”
Former Italian Prime Minister Enrico Letta told Dutch newspaper De Volkskrant: “The image Italians have of the Netherlands has been drastically polluted in just a few days.
“And not just in Italy. Look at the reaction in Portugal and Spain. They are surprised, severely disappointed reactions.
“Nobody expected that the Netherlands, one of the founders of the European Union, would behave like this at just such a moment.”
Dutch MEP Sophie in’ t Veld warned her Government they are “playing with fire”: “The Netherlands, like many other governments, enjoys that feeling of ‘We’re a little bit stubborn.’
“But it is becoming clear that they are playing with fire, because if Italy falls, then the eurozone and EU falls, and then we fall as well.”