In an interview with German TV channel ARD, Italy’s Prime Minister Giuseppe Conte called on Europe to show “common house” and demonstrate it can respond to the epoch-making challenge of coronavirus.

Conte said coronabonds would not require German citizens to pay for Italy’s debt accumulated in the past. Rather, it would mean mutualising any new debt generated by the fight agains the pandemic, he explained.

While acknowledging that opinions in Germany may differ, he added: “I want to tell all German citizens: we are not writing a page of a textbook on economics but a page of a history book.”

For Conte, coronabonds would put in place favourable market conditions to finance the recovery efforts, from which everyone will benefit.

“The EU is competing with China, and with the US that has allocated €2 trillion to react. If our reaction is not cohesive, vigorous and coordinated, Europe will become less and less competitive on the global market stage,” the Italian PM said.

According to Conte, EU leaders need to explain to their citizens that this is an emergency that affects everyone and from which no single country is immune.

“All countries are affected, everyone is on the front line. If an outpost retreats, the invisible enemy can spread and all our efforts would be in vain,” he said.

As of Tuesday (31 March), the total number of infected people in Italy reached 105,792, while the death toll climbed to 12,428, with a daily increase of 837. According to the leading technical-scientific body of the Italian National Health Service, Italy has reached or is close to the peak of the disease.

“Even though the number of infected people is decreasing, we must not frustrate the efforts made so far,” Conte commented.

The research unit of the business association Confindustria released a report on Tuesday saying that the loss of GDP in the first half of 2020 will be “huge”, with a cumulative fall in the first two quarters of around -10%.

Assuming the acute phase of the emergency is overcome at the end of May, Italy’s GDP is expected to fall by 6% in 2020.

‘Not so empathetic’

Meanwhile, the Netherlands seemed to back down from its previous harsh rhetoric toward Europe’s southern countries when it comes to issuing eurobonds.

“We were not empathetic enough, to the point that it has raised resistance,” Dutch Finance Minister Wopke Hoekstra told private broadcaster RTLZ.

“We did not succeed in conveying what it is we want to do,” he added.

Hoekstra suggested last week that research should be carried out on the reasons why some EU countries do not have the financial means to deal with the coronavirus pandemic.

His comments drew the ire of Portuguese Prime Minister Antonio Costa, who described his words as “repugnant”.

The Netherlands – together with Germany, Finland and Austria – oppose the European southern countries’ push for “coronabonds” to tackle the economic fallout of the coronavirus crisis.

They view it as an attempt by southern partners to benefit from cheap borrowing rates afforded to states with balanced budgets.

However, the crisis is expected to raise budget deficits everywhere, not just in Southern EU countries. “Inevitably, we will all come out of the crisis with much larger debt levels,” said Eurogroup chief Mario Centeno in a letter to EU finance ministers sent earlier this week.

“But this effect and its lasting consequences should not become a source of fragmentation,” the Portuguese finance minister added.

[Edited by Sarantis Michalopoulos andFrédéric Simon]