This argument for policy action on the European (or even global) level also applies to the economic policy reaction to the COVID-recession.
The socio-economic lockdown made necessary by the COVID-19 virus will damage economies. A quick recovery and limitation of further damage will require fiscal policy actions. While many such actions have been taken already to help firms and households during
the lockdown phase, more might be needed in the recovery phase. Given the close interconnectedness of European economies (in the form of supply chains, good and service market integration and labour mobility) it is in every country’s interest
that such recovery happens quickly and across all countries in Europe. There are thus strong externalities of national fiscal policy actions, which – without coordination - can result in too little fiscal policy. As important, however, is that some countries
have less fiscal space available than others. This is clearly reflected in the fiscal policy measures to-date, which have been much more expansive in Germany than, for example, in Italy or Spain. So, what role can European institutions play in these