Spain urges EU-wide fiscal response to coronavirus after ECB plan

5/5 © Reuters. Military Emergency Unit members disinfect Madrid?s Adolfo Suarez Barajas Airport in Madrid © Reuters. Military Emergency Unit members disinfect Madrid?s Adolfo Suarez Barajas Airport in Madrid 2/5

By Jesús Aguado and Emma Pinedo

MADRID (Reuters) – Spain on Thursday praised the latest European Central Bank’s new bond purchase scheme to help blunt the effect of coronavirus, which helped bring down borrowing costs in southern European countries, and called for an EU-wide fiscal response.

Economy minister Nadia Calvino said in an interview with Antena 3 TV channel that the ECB move represented a “powerful decision” to respond to “what was needed at the moment”.

Calvino called for Spain’s European Union partners to coordinate a common fiscal response to the crisis to reduce its effects on the region’s economy.

Her comments came after the ECB launched new bond purchases worth 750 billion euros ($ 817.1 billion) at an emergency meeting late on Wednesday in a bid to stop a pandemic-induced financial rout shredding the euro zone’s economy.

The ECB plan had immediate effects across the euro zone where government bond yields slid sharply on Thursday morning.

She declined to gauge the epidemic’s economic impact, saying it was not the right moment as the priority was now to take measures worldwide to tackle the disease.

In Spain, the number of coronavirus cases rose to 17,147 on Thursday compared to 13,716 on Wednesday and the death toll climbed to 767 from 558.

The borrowing costs of southern European countries shrunk on Thursday. Italy, which has seen its borrowing costs jump in recent days, led the move. Its 10-year Italian bonds yields slid as much as 90 bps to 1.40% ().

The risk premium on Italian bonds – the gap over safer German 10-year Bund yields – tightened almost 100 bps from Wednesday’s close to around 169 bps.

Spanish and Portuguese 10-year bond yields slid around 30 bps each.

On Thursday, Spain managed to sell 5 billion euros in debt.

Calvino told Antena 3 that her government was prepared to approve additional measures if needed.

On Tuesday, Spain announced a 200 billion euro ($ 220 billion) package to help companies and protect workers and other vulnerable groups affected by the spiraling coronavirus crisis.

Spanish Prime Minister Pedro Sanchez separately welcomed the ECB’s plan and also called for more EU-wide coordination.

“These are times of responsibility, solidarity and united action from all the institutions of the EU,” he said on Thursday through his twitter account.

“We will do whatever it takes,” he added.

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