Europe’s debt time bomb

Balance of Power From FOLLOW US SUBSCRIBE   As the coronavirus ravages Italy, the European Union has spent weeks arguing with itself about how to help. The disagreements have seen the Germans and Dutch line up against the Italians and French over the best way to deliver aid to economies hit by the pandemic. That has ripped open a long-held wound at the heart of the EU: the divide between north and south. As Alessandra Migliaccio and John Ainger write, there has for years been suspicion that Italy's endless borrowing could come back to bite not just it, but more fiscally responsible EU states. And that they would once again have to clean up the mess a weaker country had made. But while the EU debates everything from bigger credit lines to coronabonds, Italy is careering toward economic danger. Even as the World Health Organization says there are signs of some stabilization in Europe's outbreak, Italy is discussing extending its lockdown into May. The social costs are also rising. As John Follain explains, Italy's depressed south is becoming a powder keg. Police are patrolling the streets of Sicily's capital, Palermo, amid reports that gangs are using social media to plot looting attacks on stores. Officials worry the mafia may be stirring trouble. Part of being in a union means accepting you're only as strong as your weakest link (unless you're the U.K. and opt out). For the EU, that means potentially some gritted teeth and a push toward a consensus on how to respond — before Italy collapses. — Rosalind Mathieson A soldier checks a commuter's certification form during lockdown checks at a railway station in Milan on March 10. Photographer: Camilla Cerea/Bloomberg Global Headlines Just In: Spain reported 849 new coronavirus fatalities, marking its deadliest day since the crisis started. In line | Industries that missed out on the largest stimulus bill in U.S. history are already lobbying to ensure they get a piece of the next one. Restaurant owners, hotel operators, renewable power developers and the U.S. Chamber of Commerce are among those seeking funds. Lawmakers have made it clear further help is likely. Airlines seeking aid as part of the just-passed $2.2 trillion stimulus package will be required to propose upfront how the government could retain financial stakes in their companies in exchange. Get shopping | In a bid to jump-start consumption after the virus outbreak in China, authorities are distributing vouchers and offering subsidies on larger purchases such as cars, while state media plays up stories of officials venturing out to enjoy local delights like bubble tea and pork buns. But as Dandan Li reports, many Chinese are hesitant to return to their old lives. Mind the gap | The U.K. government is under pressure from the opposition and the media over the failure to meet its target of testing 10,000 people a day for the virus. Testing levels in Germany, France and Italy far exceed the U.K., despite promises by Prime Minister Boris Johnson — who contracted the illness — that efforts are being ramped up. Punishing aid | Russian President Vladimir Putin has the U.S. to thank for helping him prepare for a global economic crisis, as the steady deluge of sanctions forced the country to boost its reserves and shed debt over the past five years. Natasha Doff and Anya Andrianova explain how the fortress approach that had been pushing Russia's economy into stagnation is starting to look like good foresight. Costly spat | The U.S. military could put almost half of its 8,500 South Korean civilian workers on furlough amid a dispute over the Trump administration's demands for a huge bump in troop funding. The workers, who provide services ranging from security to working in mess halls, have been told not to report to American bases as of tomorrow if the countries can't find a way to extend a cost-sharing deal that expired on Dec. 31. What to Watch Big donors to U.S. presidential campaigns are feeling the economic pinch from the pandemic and holding onto their money just when candidates — especially Democratic front-runner Joe Biden — need it most. President Donald Trump said the U.S. might soon expand the travel ban affecting places like Europe and China to "a few more" nations. The White House could announce as early as today it will dramatically relax automobile emissions and fuel economy standards so that only modest efficiency gains are required through 2026. Vietnam ordered a nationwide 15-day lockdown starting tomorrow, banning gatherings of more than two people and forbidding residents from going outside except for essential needs. Tell us how we're doing or what we're missing at balancepower@bloomberg.net. And finally ... Britain has a fruit and vegetable problem. While it produces more than half of what it eats, the U.K. depends on the EU for a quarter of its food imports, most of its seasonal workers come from abroad, and a 10th of those working in agriculture are over the age of 70, a demographic particularly at risk from the virus. Some Britons are taking matters into their own hands: Sales of seeds for growing food at home are skyrocketing. Fruit and vegetables for sale at Borough Market in London on March 24. Photographer: Olivia Harris/Bloomberg     You received this message because you are subscribed to the Bloomberg Politics newsletter Balance of Power. You can tell your friends to sign up here.   Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022