The economic crisis caused by the pandemic and the efforts to deal with its consequences have created new data in the economies of European countries. According to forecasts, member states' public debt has soared to 116% of GDP in France, 160% in Italy and 70% in Germany. Also, the government deficit is expected to reach 10.5% for France in 2020, 12.2% for Spain and 6% for Germany. These figures are far from the limits set by the Stability Pact, which requires member states to maintain a public deficit of less than 3% of GDP and a debt of less than 60%.
Since the onset of the crisis, governments have been issuing bonds so that they can finance support programs for their economies, which the Central Bank then buys, squeezing lending rates to historically low levels, something that cannot continue indefinitely.
Under these circumstances, discussions have already begun on managing debt growth and crisis exit policies through new fiscal tools. Various proposals have been put on the table. One of them involves the review of the Stability Pact, which was frozen at the beginning of the coronavirus crisis, and even with positive growth rates, it will take several years for economies to be able to meet these criteria again.
A second proposal is the "autonomy" of the debt of the pandemic, that is, its special treatment in terms of its fiscal recording and the characterization of its service costs.
Finally, there are views proposing debt relief due to the new coronavirus pandemic, which of course was immediately rejected by the President of the European Central Bank, Christine Lagarde, as it would be a violation of the Treaty of the European Union.
Whichever is the solution or solutions that will be adopted in the end, it is certain that the coronavirus pandemic has changed Europe's economies once and for all.