Euro-area economy dips into record contraction

Bloomberg

The euro-area economy plunged into a record contraction, an outcome that will only add more urgency to controversial demands for joint government fiscal support.
Output in the 19-country region shrank 3.8%, reflecting shutdowns to contain the coronavirus that have pushed businesses close to collapse, sent unemployment surging and forced governments to unleash billions of euros in emergency stimulus.
Italy, saddled with one of the world’s highest debt burdens, saw GDP fall 4.7% in quarter. France and Spain, also with limited room to spend their way out of pandemic, reported contractions of more than 5%.
As the health crisis has morphed into an economic catastrophe, those countries have called for a solution that would see the burden of fiscal support shared through joint European Union debt sales. Governments such as Germany and the Netherlands have rejected that over fears they’ll end up with much of the bill.
Most economists predict the Governing Council will pause to see whether governments can agree on comprehensive fiscal support.

More aid might come first from the European Central Bank, when President Christine Lagarde and her colleagues decide later on Thursday whether their planned asset purchases of more than 1 trillion euros ($1.1 trillion) this year are enough to assist the economies in need.
Most economists predict the Governing Council will pause to see whether governments can agree on comprehensive fiscal support. A minority including Goldman Sachs, however, expect a bump up in monetary stimulus immediately.
Separate figures on Thursday showed inflation in the euro zone slowed to just 0.4% in April, the weakest since 2016. That was largely driven by the collapse in oil prices, with energy costs plunging almost 10%.