Europe's Coronavirus Plan Is Not Enough

The economic damage from the Coronavirus epidemic has prompted calls for Europe to relax its fiscal rules to allow governments to cut taxes and increase spending. The European Commission seems to agree: Paolo Gentiloni, its economy tsar, has hinted that affected governments — such as Italy — may enjoy some budget “flexibility” to deal with the emergency.

Granting more leeway is a welcome step, but it’s only a second-best approach. The virus risks affecting some countries much more than others. A centralized euro-zone budget would be a better way to address these localized difficulties, since it would allow the channeling of funds to countries where it was most needed. Some governments have much less fiscal space that others — think of Italy, which is struggling with the continent’s worst coronavirus outbreak. It’s unfortunate that a euro-area pot of money does not exist for this kind of eventuality; instead, some member states will be forced to borrow more even when they have very high levels of public debt.