Financial Times Europe - 13.03.2020

Friday13 March 2020 ★ FINANCIAL TIMES 3

CORONAVIRUS

Duterte orders greater Manila

to be put into 30-day quarantine

Cases so far

Rodrigo Duterte, Philippine president, has put greater

Manila, where 12m people live, into lockdown for 30

days to prevent the spread of Covid-19.

Mr Duterte announced the quarantine, which will

affect 16 cities and one municipality in the Philippine

capital,yesterday. “Community quarantine is hereby

imposed in the entirety of Metro Manila,” said a state-

ment by a government inter-agency task force, parts of

which Mr Duterte read out.

First signs of virus detected in camp

for displaced people in northern Iraq

The first suspected coronavirus cases have been

recorded in one of Iraq’s huge camps for people who

have been internally displaced, the UN’s humanitarian

co-ordination agency has reported.

The affected people in the camp in northern Iraq’s

Ninewa province were taken to hospital, according to

the UN. The prospect of the virus spreading in Iraq’s

overcrowded displacement camps is a nightmare sce-

nario for aid agencies and the Iraqi government.

Number of global daily cases surges

Canada’s Trudeau self-isolates after his

wife is tested over flu-like symptoms

Canadian prime minister Justin Trudeau will “self-

isolate and work from home” after it was revealed that

his wife, Sophie, was being tested for the coronavirus.

Having recently returned from a speaking engage-

ment in London, Mrs Trudeau began exhibiting “mild

flu-like symptoms including a low fever last night”,

according tohis spokesperson. Mrs Trudeau sought

medical advice and isself-isolating at home while

awaiting test results.

China automakers feel brunt as sales

plummet 82% in February year on year

A dramatic drop in vehicle sales in China in February

underlined the depth of the economic damage done by

the country’sshutdown.

Sales plummeted by 82 per cent from a year earlier

and automakers are braced for a long wait until the

market recovers even as more people tentatively return

to work. Last month, the outbreak led a trade group for

Chinese carmakers to predict sales in 2020 would

shrink by 5 per cent.

New daily confirmed cases











Mar  Mar  Mar 

Source: Johns Hopkins University, CSSE

Italy

Iran

S Korea

China

Rest of

the world

The number of new daily cases has almost doubled since

Monday. Italy recorded the most new cases on

Wednesday, with 2,313 reported out of a total of 7,670.

127,

cases and 4,718 deaths by 5.33pm GMT March 12

Source: Johns Hopkins University

Read more at ft.com/coronavirus

CORONAVIRUS

ROUND-UP

M A RT I N A R N O L D— FRANKFURT

Christine Lagarde yesterday left an
unfortunate impression on markets
with her first change in monetary pol-
icy since taking over at the European
CentralBank.

Ms Lagarde sought to emphasise that
her style as the central bank’s president
was different to that of her predecessor
Mario Draghi. But her comments trig-
gered an unfavourable reaction from
investors and analysts.
European stock markets plunged and
Italian borrowing costs soared as inves-
tors were underwhelmed by the ECB’s
easing package, and the sell-off intensi-
fied during Ms Lagarde’s press confer-
ence. Many had expected a rate cut, or a
bigger scaling up of the asset purchases
programme.
“Lagarde had a total shocker,” said
Mark Dowding, chief investment officer
at BlueBay Asset Management. “If this is
her version of shock and awe we should
all be very scared. I can only imagine
Draghi must have been watching the TV
with his head in his hands as he watched
a lot of his good work quickly being
undone.”

One European official described Ms

Lagarde’s press conference perform-

ance as “terrible”.Rabobank strategist

Richard McGuire said markets were left

with the impression of the ECB “not

being in control”.

The ECB kept its main deposit rate

unchanged at its existing record low

level of minus 0.5 per cent, saying it

would buy €120bn more bonds by the

end of this year, on top of its existing

commitment to buy €20bn a month.

But it was her remarks that it was not

the ECB’s job to respond to moves in

government debt markets that trig-

gered alarm.

Frederik Ducrozet, strategist at Pictet

Wealth Management, said central bank-

ers “need to choose [their] words very

carefully and unfortunately this is not

only wrong, it is also a communications

mistake”. He said: “It is the first time

that market conditions have necessi-

tated a follow-up interview by an ECB

president to correct a statement.”

He added: “It’s a shame, because

apart from that [mis-step] the package

exceeded my expectations and was per-

fectly calibrated.”

Asked if the negative immediate reac-

tion in markets indicated the ECB’s

response was weak compared with

other central banks, Ms Lagarde

pointed out that it would be lending to

banks at minus 0.75 per cent and buying

an extra €120bn of bonds this year. She

added: “I’m not sure you can so much

rival that at the moment.”

Ms Lagarde sought to pile pressure on

European governments to do more with

fiscal policy to shield the eurozone econ-

omy from the disruptive consequences

of the virus.

After announcing the ECB’s monetary

policy easing measures, she spent much

of her press conference urging eurozone

governments to come up with an “ambi-

tious and collective fiscal response”.

“What I’m particularly worried

about, it would be the complacency and

the slow-motion process that would be

demonstrated by the euro area in partic-

ular,” she said, adding that she was hop-

ing for a bigger fiscal response in the

next meeting of eurozone finance minis-

ters that takes place next week.

The ECB president stressed that the

response to the current economic crisis

needed to be “fiscal first and foremost”,

and said the spending pledges so far

from eurozone governments amounted

to only €27bn in total, or 0.25 per cent of

GDP.

Economists estimate the scale of the

ECB’s quantitative easing programme

will rise to €33bn a month for rest of this

year. Ms Lagarde said the additional

asset purchases would be focused on

corporate bond markets but the central

bank would maintain flexibility in how

it bought assets.

Additional reporting by Sam Fleming and

Miles Johnson

Easing package

Lagarde’s response to stock market sell-off rattles investors

JA M E S P O L I T I A N D L AU R E N F E D O R

WASHINGTON

Mitch McConnell, the Republican Sen-

ate majority leader, accused Demo-

crats in Congress of proposing an “ide-

ological wishlist” in response to coro-

navirus, as political sparring escalated

over stimulus measures to protect the

USeconomyfromaseveredownturn.

WithUS equity markets sinkingafter

US president Donald Trump failed to

reassure investors that he could contain

the crisis, senior Republicans on Capitol

Hill rejected legislation presented this

week by Democrats to limit the eco-

nomic fallout. Their proposal included

boosts to jobless benefits and food aid,

free testing for coronavirus, and paid

leave for ill workers.

Instead, Mr McConnell said that

Congress shouldwork on “smaller, non-

controversial pieces of legislation” —

suggesting that only a limited package

would garner sufficient support from

lawmakers.

Nancy Pelosi, the Democratic Speaker

of the House, defended the Democrats’

proposed legislation, telling reporters

that the bill “put families first”.

Amid the stand-off, Ms Pelosi and Ste-

ven Mnuchin, the US Treasury secre-

tary, have been holding talks to reach a

compromise.

“He had some suggestions, all very

reasonable. I think none of them would

prevent us from moving forward with

the bill,” she said. But Ms Pelosi also

rejected a suggestion from Kevin McCa-

rthy, leader of the House Republicans,

that Republicans would need two more

days to come to an agreement.

“We need to make a decision to help

families right now,” she said.

Mr Trump’s proposal to cutpayroll

taxes as fallen flat amid oppositionh

from many Democrats as well as wari-

ness from some Republicans.

“People are narrowing down the

scope [of the talks] to what are the

things that we can draft quickly and

implement quickly and have broad con-

sensus,” said Neil Bradley, chief policy

officer at the US Chamber of Commerce.

Stimulus measures

Congress squabbles over ways

to protect US from downturn

F T R E P O RT E R S

More than 40 per cent of EU residents
are facing life under far-reaching coro-
navirus-related controls as national
leaders battle to limit the accelerating
spread of the virus.
The announcement of new restric-
tions in countries including Ireland,
Spain, Poland and the Czech Republic
yesterday brought the number of people
affected by planned or imposed meas-
ures to well over 190m, according to
Financial Times analysis.
Controls resulting in significant
changes to everyday lives have centred
on the closure ofpublicspaces such as
schools, universities and government
buildings but they extend to Italy’s deci-
sion to quarantine its entire population.
Irish prime minister Leo Varadkar
ordered the closure of Ireland’s schools,
colleges and childcare facilities from
6pmyesterday, while in Spain schools,
universities and public events were
being shut down across an expanding
swath of the country.
Poland announced a state of epidemic
threat, which gives the government the
power to temporarily limit certain types
of movement.
Slovakia declared a state of emer-
gency, banning visits to hospitals and
social care facilities and ordering the
weekend closure of all shopping malls,
excluding food stores and pharmacies.
On Wednesday, Denmarkannounced
the closure of all its schools, kindergar-
tens and universities.
In total, around 22,000coronavirus
cases have been confirmed in the EU,
with the number of deaths approaching
1,000.
The measures aimed at curbing the
spread of the disease are having far-
reaching effects on the economies as
well as individual workers, triggering
warnings that Europe is heading into a
severe recession. The wide divergence
between the types and scale of measures
taken by different governments under-
scores a lack of any overarching strategy
or co-ordination.
Maria Demertzis, deputy director of
the Bruegel think-tank in Brussels, said
the bloc faced a “mammoth challenge”.
“We are not one country, and the bulk

of the responsibilities are still with

national governments,” she said.

“Europe does find it difficult to move

forward, but it has shown in the past

that it is capable of dealing with crises.”

The policies affecting people’s regular

lives are distinct from a range of other

targeted measures, including require-

ments on people arriving from heavily

hit countries such as Italy or China to go

into quarantine.

A wide range of countries, including

Sweden and France, have also restricted

large gatherings of people. Estonia’s

prime minister has banned cruise ships

from docking and events of more than

100 people, for example, while Fin-

land’s government is preparing to intro-

duce its first restrictions on events.

In Spain, Catalonia, the Basque coun-

try and Galicia all announcedyesterday

that schools would e closed, followingb

similar measures taken by Madrid.

The UK government moved its

response to the virus from the contain-

ment to the “delay” phase and told peo-

ple with even mild symptoms to stay at

home for seven days.

But Britain is not following the strat-

egy of some countries in closing schools

to limit the spread of the disease,

although it recommended that interna-

tional school trips should be cancelled.

The government expects the outbreak

in the UK to peak in 10 to 14 weeks’

time.

France has said it does not favour a

complete shutdown of the country or

the closure of borders and is instead

targeting vulnerable regions and insti-

tutions to slow the spread of the

pandemic.

However, President Emmanuel

Macron was last night set toaddress the

nationas France enters the third and

most difficult phase of handling the epi-

demic: a concerted effort to avoid a

sharp peak in hospital cases that could

overwhelm the health system.

In Germany, uthorities havea ecom-r

mended the cancellation of all events

attended by more than 1,000 people,

and most of Germany’s 16 states have

followed this advice.

Measures in oland have been moreP

draconian.Health controls are in opera-

tion at borders. All flights from Poland

to Italy are cancelled.

Sam Fleming and Jim Brunsden in Brussels,

Victor Mallet in Paris, Guy Chazan in Ber-

lin, Daniel Dombey in Madrid, Richard

Milne in Helsinki, James Shotter in Warsaw,

and Valerie Hopkins in Budapest

National capitals left to take lead

in curbing spread across the EU

Measures range from closure of Danish schools to quarantining of Italy’s population

DA N I E L D O M B E Y I N M A D R I D

Spain’s king and the nation’s cabinet
were tested for coronavirus and the
Real Madrid football team went into
quarantine as the stock market plum-
metedarecord14percent.

With the virus spreading rapidly, Spain
had registered 3,004 cases as last night
—upmore than 800 in less than 24
hours — of which almost half ere inw
Madrid. Nationwide 86 people have
died, up from 47 on Wednesday, while
189 have recovered.
The Ibex 35 index of leading stocks
has lost more than a third of its value in
less than a month as fears spread of a
shutdown hitting the tourism, con-

sumer and manufacturing sectors on

which the economy depends.

Pedro Sánchez, prime minister, called

on schools to close and for the sick and

elderly to stay at home while outlining

an €18bn plan to help health services

and relieve the pressure on small and

medium-sized businesses.

“I have no doubt we are going to over-

come this crisis,” he said. “But we should

overcome it as soon as possible and at

the lowest cost in terms of lives.”

Irene Montero, equalities minister,

has already contracted the virus, lead-

ing the entire cabinet and King Felipe VI

and Queen Letizia to undergo tests.

Ms Montero attended an event with

the queen last week. The minister and

her partner, Pablo Iglesias, deputy

prime minister and leader of the

Podemos party, are in quarantine. The

government said her condition was

good.

Real Madrid said its football and bas-

ketball teams and associated staff were

also going into quarantine after a mem-

ber of the first basketball team tested

positive. First and second division La

Liga games will be suspended for at least

two weeks.

Mr Sánchez said the government

would assume the power to regulate the

prices of medical products and advance

€2.8bn to regional authorities for health

spending, while releasing €1bn from

contingency funds for priority health

needs. It would also give a six-month tax

holiday to SMEs and the self-employed,

the equivalent of a €14bn boost.

But he suggested a further fiscal stim-

ulus would be necessary and called for

the opposition to help pass a budget in

coming weeks. The prime minister has

been unable to pass his own budget

since first coming to power in June 2018.

Ahead of Mr Sánchez ’s call for schools

to close, the Basque country, which has

registered 346 cases, the second-highest

tally in Spain, and Catalonia, which has

registered the third-highest with 260

cases, said they were doing so.

Madrid announcedsuch measures ot

limit transmission of the virus earlier

this week.

Public health

Spain’s leaders undergo tests and shares plunge record 14%

Sign of the times:

members of the

public walk

past graffiti

depicting a

protective mask

in Barcelona,

Spain —David

Ramos/Getty Images

On other pages

Editorial

Comment,

page 8

Opinion, page 9

Lex, page 10

Companies

& Markets,

pages 13-

Christine Lagarde: her performance

yesterday was described as ‘terrible’

MARCH 13 2020 Section:World Time: 12/3/2020- 19:14 User:peter.bailey Page Name:WORLD2 USA, Part,Page,Edition:USA, 3, 1