NEW YORK/BRUSSELS (Reuters) - As the contagion from the coronavirus pandemic wrecks the global economy, Western policymakers are scrambling to find a consensus on how best to contain the crisis pummelling financial markets.

FILE PHOTO: The final numbers of the day are displayed above the floor of the New York Stock Exchange (NYSE) stands empty as the building prepares to close indefinitely due to the coronavirus disease (COVID-19) outbreak in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson/File Photo

While governments have agreed to ditch decades of fiscal orthodoxy to flood their economies with cash, arguments over how the vast sums of money should be spent are stalling measures to prevent a global recession becoming a debilitating slump.

The U.S. Federal Reserve unveiled an unprecedented array of measures on Monday to shield the world’s largest economy after party politicking stymied efforts to get a rescue package worth more than $1 trillion through the U.S. Senate on Sunday.

A second attempt to pass the bill failed on Monday as Republicans accused Democrats of obstruction and dilly-dallying during a national emergency.

Despite the initial optimism over the Fed’s package, Wall Street slipped on concerns over the mounting death toll from COVID-19 in the United States and growing evidence of the economic hit to corporate America.

Tuesday brings the first snapshot of the damage to the global economy with the release of preliminary corporate purchasing manager surveys from five of the world’s largest economies, which are expected to paint a picture of a widespread deceleration in business activity this month.

Goldman Sachs forecast that U.S. gross domestic product would shrink an unprecedented 24% in the second quarter while consumer confidence in the 19 European countries that share the euro currency tumbled to a five-year low in March.

Underlining the global scale of the crisis, International Monetary Fund Managing Director Kristalina Georgieva said 80 countries had requested emergency IMF financing and it was ready to unleash its $1 trillion of lending capacity.

Finance ministers and central bank governors from the G7 wealthy countries, meanwhile, said they plan to discuss coronavirus responses on Tuesday.

Analysts said the challenge for policymakers was to act fast enough to stop fears about the pandemic leading markets lower.

“Swift implementation is of the essence, given the lingering level of stress in the markets,” AXA Group Chief Economist Gilles Moec said.

‘WE ARE AT WAR’

Across Europe, policymakers have deployed a raft of measures, collectively pledging hundreds of billions of euros to cut taxes and extend unemployment benefits as businesses shut their doors and lay thousands off.

Germany on Monday agreed a package worth up to 750 billion euros ($808 billion) to mitigate the damage to Europe’s largest economy, with Berlin aiming to take on new debt for the first time since 2013.

The European Union’s executive has expedited reviews of state aid schemes in a record two to three days to provide liquidity to small- and medium-sized businesses across the 27-country bloc.

The European Commission will also present a tool for the euro zone’s bailout fund - the European Stability Mechanism (ESM) - which has 410 billion euros ($438 billion) of idle lending muscle. That could unlock unlimited purchases of sovereign debt by the European Central Bank.

But the idea of issuing EU eurobonds — debt backed by all members states — to raise more cash is still too much to stomach for some richer countries and hopes for a breakthrough at a virtual gathering of EU finance ministers on Monday are slim.

Spanish Prime Minister Pedro Sanchez, whose country is struggling with Europe’s second-worst outbreak of the COVID-19 disease after Italy, says much more is needed.

“We are at war,” he said on Sunday, calling on Europe to launch a massive, coordinated public investment programme akin to the post World War Two Marshall Plan.

However, diplomats say Germany and the Netherlands, which have large budget surpluses and falling debt levels, are wary of pooling risk with weaker EU economies, some still emerging from the fallout from the financial crisis nearly a decade earlier.

DILLY-DALLYING

In Washington, there is similar wrangling over how exactly “helicopter bailouts” should be spent even as some central bankers call for massive state support with no strings attached just to keep the U.S. economy on life support.

St. Louis Federal Reserve President James Bullard told Reuters that governments should match any lost wages and lost business, no questions asked.

U.S. senators on Monday failed again to settle their differences over the coronavirus economic stimulus package following Sunday’s attempt.

Democrats objected to the package, saying it contained neither enough money for hospitals nor enough restrictions on a fund to help big businesses. They said, however, they were close to an agreement with Republicans and predicted a modified version would pass soon.

Eurasia U.S. Director Todd Mariano said the politicking over giveaways was only likely to delay the bill by a day or two.

“The daily freezing of economic activity due to the pandemic’s spread will subsume those concerns for now in the face of the overriding need to protect the U.S. economy,” he said.