Bailouts for people, not for banks

The Covid-19 pandemic has caused millions of people across Europe to lose their jobs and slashed their incomes. The European Central Bank (ECB) has prioritised multinational companies over ordinary people in their response to the crisis. Helicopter money – direct cash transfers from the ECB to Eurozone citizens – would help build a post-coronavirus economy which puts regular people first.

The coronavirus crisis could trigger an unprecedented recession across Europe. Millions of people have been made unemployed and are being forced severely into debt. The poorest amongst us are becoming even poorer.

Governments and central banks have a duty to respond quickly to any economic crisis to guarantee the economy does not spiral down into a disastrous long-lasting recession or depression.

It’s time for helicopter money

If the ECB implemented helicopter money now, we could stop Covid-19 causing a severe and long-lasting recession. But the bank is currently rolling out a programme of quantitative easing instead, providing no-strings-attached funding to banks and companies in a way which exacerbates already high levels of inequality across Europe.

Instead of pumping more money into financial markets, as the ECB is doing with quantitative easing, the bank should deploy helicopter money. It is a policy under which the central bank creates money and sends it directly to members of the public, in the form of unilateral transfers which do not have to be paid back.

By sending €1,000 to every adult in the Eurozone, the ECB would provide exactly the kind of powerful boost needed to kickstart the economy once the Covid-19 public health crisis is over.

Direct money transfers like this are an immediate and equitable way of boosting private spending when our economy needs it most – without increasing the public and private debt burden. Helicopter money would also negate the need for EU policymakers to subject European countries to another round of misguided austerity after the coronavirus crisis has receded.

The medical emergency may be abating, but the economic emergency is going nowhere fast. Hesitating to act now will dramatically worsen the recession we’ve already been thrown into by the coronavirus.

The European Central Bank must seize the initiative and provide helicopter money to the public immediately, and build a people-centered recovery from Covid-19.