Alessio Looks at Impact of Virus on Europe's economy

From his Brussels office, Alessio Terzi is looking at the coronavirus through the numbers. They are not the tragic ones of the ongoing health emergency, but the cold numbers of the European macroeconomic situation. The drop in economic activity is going to make its weight felt in the coming weeks and months. Alessio, 32, who graduated in 2009 from Bocconi with a Bachelor in International Economics and Management (BIEM), is an economist in the Policy Strategy Unit of the European Commission's Directorate-General for Economic and Financial Affairs (DG-ECFIN). 

What exactly is the job of your unit? 

It is a team that analyzes and develops economic policy strategies. It is a coordination group that works on different fronts, from tax policy, with the implementation of the Maastricht rules, to the coordination of recommendations to various countries about economic policy. In particular, I deal with the most strategic and forward-looking component, a sort of internal think-tank which makes innovative economic policy proposals that support the political priorities of the Von der Leyen Commission. Being a small and agile team, we can quickly reorient our work on the priorities of the moment. 

And now there is the coronavirus. What aspect are you focusing on? 

In the first phase, we were monitoring the developments of the virus in China and we were considering the possible macroeconomic impacts on Europe. When the coronavirus arrived in Europe, we started to focus on other aspects: on the one hand, understanding the economic impact of lockdowns, travel restrictions, and quarantines; on the other, to analyze the responses of governments at the macroeconomic level, while giving indications on how they could best deal with this unprecedented situation. Our task, in fact, is to coordinate the economic policy response of individual governments, a response that should be as uniform as possible

What kind of economic impact do you expect for Europe? 

It is a systemic shock, potentially similar to that of the 2008 financial crisis, as pointed out by ECB President Christine Lagarde. The question is to understand what kind of crisis will develop, whether with a V-curve (rapid descent and equally rapid recovery), or a U-curve (which will drag over time). Unfortunately, in our models there are no variables such as those that we must include in this situation (one, for example, being the sudden closure of shops due to virus containment measures). 

 What is the Commission thinking about for the foreseeable future? 

From the point of view of  fiscal rules, President von der Leyen has already said that maximum flexibility will be given to Italy regarding exceeding deficit and debt levels. In addition, the Commission is establishing a capital fund to support SMEs and the health system, and is activating extraordinary safeguard clauses to allow state aid to various sectors. 

How did you get to work at DG-ECFIN? 

After a short experience in the ECB, I worked five years in the Bruegel economic policy think-tank and I have a doctorate done at the Hertie School and Harvard: it was the profile that the Directorate was looking for, a hybrid figure with knowledge of institutions, think-tanks, and academia. 

In Italy the containment measures for the virus have become increasingly stringent. How is the situation in Brussels? 

Let's say that most of us are smartworking now and that the lockdown is approaching.