Germany opposes the European Court of Justice (ECJ) on the bond buying program
Europe is a colourful continent in terms of policies and outcomes. It is essential to stay updated on how these policies may impact your work to build better regulatory frameworks, enhance your message and enhance communication with stakeholders.
Here you can find a summary of the major European political updates of this week.
On 6 May 2020, the heads of the federal states met with Chancellor Angela Merkel to decide on further lifting of restrictive measures. Federal Minister of Health Jens Spahn stopped plans for a COVID-19 immunity card after protests from other parties. Nonetheless, 3 million COVID-19 antibody tests are to be delivered to the German health care system this month. Regarding foreign aid, the German Federal Ministry for Economic Cooperation and Development will stop direct state development cooperation to 25 of the 85 partner countries. The new reform concept will impose new conditions on bilateral partners, such as demonstrating good governance, upholding human rights and fighting corruption.
The German Constitutional Court stunned the public by casting aside a 2018 ruling by the European Court of Justice (ECJ) that European Central Bank (ECB) bond buying was legal. It is the first time that a national court has declared an ECJ judgement as invalid and could undermine the uniform application of EU law. As a result, the judges instructed the German government and the Bundestag to request from the ECB "proportional assessment" of the bond buying program. Therefore, the Bundesbank should suspend the implementation of the ECB's bond buying program unless the ECB proves the proportionality of its monetary stimulus. The German court said that it is "not bound by the ECJ's decision but must conduct its own review". The ECB had repeatedly stated that the positive effects of the program, such as additional GDP growth, outweighed the potential negative impact. The ruling does not apply to the ECB's € 750 billion pandemic emergency purchase program (PEPP), which started on 26 March and may continue beyond this year, should the ECB determine that the Eurozone's financial and economic state require it.
Spain initiated on 4 May its first phase of the COVID-19 exit strategy, gradually lifting restrictions on movement. Face masks are now compulsory to wear in transports, and the government recommends that people continue to work from home where possible. As a follow-up of the exit strategy, regions have been tasked by the Ministry of Health to propose plans to implement the exit strategy and justify the transition of phases accordingly. Phasing-out containment measures will indeed be an asymmetric and decentralised process within the national territory, although whether proposals are accepted or rejected will be at the discretion of the Ministry of Health. The government launched a EUR 16 billion fund for all regions as part of a social and economic reconstruction plan to mitigate the impact of the COVID-19 crisis. EUR 10 billion are expected to be allocated to health expenditure. Despite the reduction of rate of new infections from 35% to 0.5% (compared to total number of confirmed cases) in the past 50 days, the government tabled a fourth extension of the state of emergency until 24 May. If the proposition does not go through, the government will have to seek another constitutional measure to be able to continue implementing the transition plan.
Prime Minister Boris Johnson will unveil the Government’s exit strategy from lockdown on 10 May. incremental easing is expected over the coming months, in conjunction with a gradual rollback of financial support measures for UK businesses. The Bank of England has predicted that if lockdown and financial support measures are only eased from June through September, the UK economy will contract by 14 percent this year. Furthermore, the Government this week launched its new ‘test, track and trace’ programme to combat COVID-19. The Government reached 122,000 daily tests on Thursday (30 April), although 41,000 of these tests had only been issued and not processed. These tests will nonetheless form the bedrock of the Government’s tracking and tracing programme. Not only testing is being advanced, but also tracing. An army of 18,000 contact tracers are being trained to trace the contacts of those who present with COVID-19 symptoms over the coming few weeks. The tracers will work in conjunction with a contact-tracing app, which is being trialled on the Isle of Wight this week.
On 5 May, the French Senate passed a bill extending the state of health emergency after extensive amendments. The bill aims to strengthen the legal framework of the lockdown measures and to include the prospect of deconfinement. The National Assembly must now vote on the bill, for adoption on 8 May. The issue that raises the most debate remains the tracing of COVID-19-infected people and contacts. Health Minister Olivier Véran has said tracing remains essential for a successful deconfinement but must not impinge on freedom and protection of personal data. Other important announcements are expected from the Government this week. President Emmanuel Macron will comment on the inclusion of the culture sector in economic recovery plans. Also, Prime Minister Edouard Philippe is due to announce precise arrangements for deconfinement in France, which is scheduled to start on 11 May. The confidence of the French in their president has eroded, from 53% mid-March to 40%. The Prime Minister has however gained popularity, going from a 36% approval rating in March to 46%.
You can find more information on European news in our EU national elections heatmap, where we provide an overarching perspective with key political insight for individual countries. Make sure to check it here.