Rebuilding the European Union Economies after the corona virus pandemic: a new Country by Country Home Equity Release Method: (E.U.HERM)

Among the European Union countries, there are some that already have reached their peak of the corona virus pandemic, while others are still struggling to get a grip on the epidemic. In a number of countries, at the time of writing, a lock down situation is still in place. How will the economies look like after the pandemic is tamed? The IMF in its latest blog on the world’s financial stability came to the following conclusions: “Central banks will remain crucial to safeguarding the stability of global financial markets and maintaining the flow of credit to the economy. But this crisis is not simply about liquidity. It is primarily about solvency—at a time when large segments of the global economy have come to a complete stop. As a result, fiscal policy has a vital role to play. Together, monetary, fiscal, and financial policies should aim to cushion the impact of the COVID-19 shock and to ensure a steady, sustainable recovery once the pandemic is under control. Close, continuous international coordination will be essential to support vulnerable countries, to restore market confidence, and to contain financial stability risks. The IMF is ready to assert the full weight of its resources—first, to help protect the world’s most vulnerable economies, and, for the long term, to strengthen the eventual recovery.” In two previous papers by this author: one about the U.S. economy and the other about the U.K.’s one, the author did illustrate that there is a substantial illiquid element of households’ savings incorporated in the homes people live in. In these papers, the why and how of turning such savings into cash was demonstrated. Such conversion of an illiquid asset into current cash can stimulate consumer expenditure, without having to fall back on additional government expenditure to achieve such goal. The help of central banks through Quantitative Easing will be vital. The E.U consists of 27 countries; for 19 countries out of the 27 it has one currency from one Central Bank (ECB). In this paper, the how and why for two countries in particular: Italy and Spain will be set out. This does not imply that the same method cannot be used in all the other E.U countries.