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‘Europe Finally Got the Message’: Leaders Act Together on Stimulus

Europe, so often derided as lumbering and divided, seems to be finding its voice in the pandemic.

A powerful new dose of stimulus by the European Central Bank on Thursday, and a German emergency spending package that defied stereotypes of stingy Prussians, were the latest evidence that policymakers are responding to the pandemic with far more muscle than anyone would have predicted a few months ago.

The central bank announced it would nearly double a de facto money printing program to 1.35 trillion euros, or $1.5 trillion, to ensure a steady flow of cheap credit to eurozone consumers and businesses. And the government of Chancellor Angela Merkel of Germany, only a few months ago a fortress of fiscal conservatism, announced a package of tax cuts, aid to small business, cash payments to parents and other measures worth €130 billion — a move requiring substantial borrowing.

A week earlier, the European Commission unveiled a plan to raise €750 billion for pandemic recovery by selling bonds that would be backed by all 27 members of the European Union, a first for the bloc on such a large scale. Individual countries like France, which has announced a €45 billion stimulus program, have also exceeded expectations.

The speed of Europe’s response has come as a surprise, especially after the infighting and procrastination that marked leaders’ response to the eurozone debt crisis that began in 2010. The euro avoided collapse then only because the European Central Bank stepped in to prevent government borrowing costs from spinning out of control. This time, the central bank and governments have been acting in concert.

“Looking at what happened in the last two weeks, this is huge,” said Carsten Brzeski, chief eurozone economist at ING Bank. “It looks as if Europe finally got the message.”

The scale of the damage inflicted by the pandemic seems to have focused political leaders’ minds and helped them to overcome the divisions and indecisiveness that hampered crisis fighting in the past. The European Central Bank’s staff economists on Thursday forecast that the eurozone economy will slump by 9 percent this year, and said a deeper slump was possible.

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Credit…Adrian Petty/EPA, via Shutterstock

Christine Lagarde, the central bank’s president, said Thursday that there “are some signs of a bottoming-out” in the economic decline, but “the improvement has so far been tepid.”

Economic forecasts, she said during an online news conference, are “surrounded by an exceptional degree of uncertainty.”

At least for the moment, the technocratic approach taken by leaders like Ms. Merkel, President Emmanuel Macron of France and Ursula von der Leyen, the president of the European Commission, seems to have paid off. The rate of new coronavirus infections and deaths has dwindled in most of continental Europe, and countries have been able to start lifting their lockdowns without provoking a fresh outbreak.

Cafes in Paris are again serving patrons outdoors. Spain, which had one of the strictest lockdowns, has allowed people to leave their homes again. Italy has lifted restrictions on domestic travel and popular tourist sites like the Leaning Tower of Pisa have reopened.

Schools across Europe are reopening, though usually with reduced hours. Stores, gyms and restaurants are operating again in Germany, although patrons are required to wear masks and practice social distancing. The government in Berlin is preparing to lift restrictions on other Europeans coming into the country on June 15.

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Credit…Andrea Mantovani for The New York Times

Risks abound, and it is not out of the question that European leaders could revert to old habits. The European Commission’s €750 billion stimulus package could run into trouble as it goes through the approval process, which requires ratification by European Union countries and the European Parliament.

Although Germany has changed its approach, other traditionally frugal countries have voiced their resistance to money’s being paid out as grants instead of loans to be paid back. They include Austria, Denmark, the Netherlands and Sweden, which have become known as the “frugal four.”

But Germany’s about-face on government spending illustrates how much attitudes have changed. Only a few months ago, German leaders were lecturing other European countries on the virtues of austerity. Now, they are the continent’s big spenders.

Under the plan announced by the German government late Wednesday, households will receive €300, or about $336, per child; pay a reduced value added tax on daily items; and receive a cut in their electricity bills.

The plan also includes €5.3 billion for the social security system, €10 billion to help municipalities cover housing and other costs, and €1.9 billion for cultural institutions and nonprofit groups. It includes incentives to buy electric vehicles, but none for gas- or diesel-fired engines, which Germany’s powerful automakers had sought.

  • Frequently Asked Questions and Advice

    Updated June 2, 2020

    • Will protests set off a second viral wave of coronavirus?

      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

    • How do we start exercising again without hurting ourselves after months of lockdown?

      Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • How many people have lost their jobs due to coronavirus in the U.S.?

      More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.