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Intesa Sanpaolo : The forthcoming Eurogroup meeting

Intesa Sanpaolo : In view of the forthcoming Eurogroup meeting, new proposals have been put on the table to help the more financially fragile countries counter the impact of COVID-19.

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Weekly Economic Monitor – 03 April 2020

Intesa Sanpaolo – Research Department


The total public deficit in the Eurozone could be higher by 400 billion in 2020 compared to 2019, and only a few countries enter the crisis with a low level of public debt. The European Commission’s proposal could make a far from marginal contribution in taking on the emergency, if implemented rapidly. The Commission also challenged government to use the next EU budget for a sort of Marshall plan to support the recovery, but it is still unclear whether this attempt will be successful. The most important measure in the medium term may still be the massive asset purchases by the Eurosystem. Nor should the contribution potentially made by a ESM credit line be underestimated.

US labour market: from full employment to deep recession unemployment levels in a matter of just one month, even if the complete picture is not fully evident from the monthly employment report data. The collapse of nonfarm payrolls by -701 thousand and the rise in the unemployment rate to 4.4% are only the tip of the iceberg of the labor market at the time of Covid-19. In the next two months, the unemployment rate could approach the highs of the 1920s.

The week’s market movers

In the Eurozone , focus will be on the Eurogroup on 7 April, that will discuss the new SURE mechanism unveiled by the EU Commission to provide financial assistance to programmes addressed to businesses in order to safeguard employment, and the other options for financial support proposed last week. February industrial output in Germany, France and Italy will be impacted only partially by the effects of the restrictive measures implemented in March by the governments of the major countries to counter the Covid-19 contagion.

In the United States , the focus will be once again on jobless claims (for the week ending on 4 April), which should be measured in millions for the third week running, pointing to an increase of the unemployment rate in April above 10%. Consumer confidence in April should sink in the wake of the Covid-19 outbreak and lockdown measures across the country. The February CPI and PPI data should be non- eventful, with a slide in headline indices due to the energy price tumble and modest increases for core indices. The minutes from the March FOMC meetings are likely to be dated, as the Fed has acted repeatedly and aggressively in the following weeks.


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Source: BONDWorld