At the time of writing, Italy has registered 27,980 cases of the coronavirus alongside 2,158 mortalities. With the country now in a nationwide lockdown, a leading economist has warned of a crisis similar to that of the 2008 financial crash could now be possible. Speaking to German newspaper Neue Osnabrucker Zeitung, Marcel Fratzscher, President of the German Institute for Economic Research, warned Italy could be at the forefront of a new financial crisis across the continent.
As well as warning of an impending financial crisis in Italy, Mr Fratzscher said Germany must do more as Berlin will suffer the impacts of the financial meltdown.
Mr Fratzscher said: “A scenario like 2008 or 2012, when Italy was on the verge of bankruptcy, can no longer be ruled out today.
“If Italy gets in trouble, Germany would also pay a huge economic price for it.
“That is why it is also in Germany’s interest that Italy does not slip into a financial crisis.”
Away from commenting on Italy’s financial situation, the expert also criticised the EU for not having an adequate strategy.
Although Commission President, Ursula von der Leyen released a statement on the outbreak yesterday, Mr Fratzscher insisted it was a mistake that “the EU does not have a coordinated strategy to combat the coronavirus and its economic effects”.
On Monday, Ms von der Leyen announced measures to stop all non-essential travel into the trade bloc for 30 days.
She said: “The less travel, the more we can contain the virus.
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“We think nonessential travel should be reduced right now in order not to spread the virus further, be it within the European Union or by leaving the European Union, but also to avoid nonessential travels not to have more potential strain on our healthcare system.”
With the coronavirus taking hold across the continent, financial experts have slashed their economic growth forecasts.
The EU Commission itself has said the economy could shrink by one percent this year.
Such is the dire situation on the continent, Italy’s Prime Minister, Giuseppe Conte warned the single market is now at risk.
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Insisting nothing like the coronavirus had ever been seen before, he said: “We will have to sit down and rewrite the rules of trade and the free market.”
Outside of the EU, the Dow Jones suffered plummeting lows not seen since the 1929 financial crash.
At the end of trading on Monday, the Dow Jones fell by 2,997 points.
The S&P 500 index also fell, as it shed 324 points to 2,386.
In order to soften the blow, the Federal Reserve slashed interest rates.
A $700billion (£570billion) quantitive easing programme was also devised to help contain the effects of the virus.
Following the initiative, the Dow Jones has seen a 5.4 percent rise today – a 1,108 points climb.
Additional reporting by Monika Pallenberg.
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