Germany pledged to spend whatever necessary to protect its economy and the European Commission said it's ready to green-light widespread fiscal stimulus for euro nations as policy makers aimed to calm the markets with a decisive response to the coronavirus.
KfW, the German state bank, can lend as much as €550 billion ($610 billion) to companies to ensure they survive the pandemic and shield their workers from its impact, German Economy Minister Peter Altmaier said at a briefing in Berlin. Finance Minister Olaf Scholz, standing alongside him, said Germany is prepared to take on additional debt and will consider full-blown fiscal stimulus if the situation worsens. Switzerland pledged 10 billion Swiss francs ($10.5 billion) of aid for its companies. European stocks surged.
"This is the bazooka," Mr. Scholz said. "We're using it to do what is necessary. We'll check later to see if we need additional smaller weapons."
Chancellor Angela Merkel said later Friday that the measures show "that we're ready to do whatever is necessary, to do whatever Germany needs, so we can get through this crisis as best possible."
EU governments were at a crossroads by Friday after a chaotic week that saw European Central Bank President Christine Lagarde warn of a Lehman-style meltdown and markets tumble as the epidemic seemed to be spiraling out of control. The commission forecast the EU economy will shrink by 1% this year with Italy, the hardest hit country, already on lockdown and the rest of the continent set to follow.
Spanish Prime Minister Pedro Sanchez declared a state of emergency Friday after the number of confirmed cases jumped by 40% in 24 hours to 4,209. A week ago there were 261. "The Spanish government will do whatever it takes" to slow contagion, Mr. Sanchez said.