EU executive supports all tools to mitigate coronavirus impact on economy

BRUSSELS (Reuters) - The European Commission supports all tools that would help mitigate the negative impact of the coronavirus epidemic on the EU economy, the EU executive arm said on Friday when asked about discussions to deploy the euro zone bailout fund to help.

"The Commission supports the institutions and member states using all the tools at our disposal to mitigate the very substantial, negative socio-economic consequences of the COVID 19 outbreak," a Commission spokeswoman said.

The Commission also said it was moving ahead with implementing a decision of EU leaders from earlier this week to allow governments to spend as much as they need to fight the epidemic without falling foul of EU budget rules -- the Stability and Growth Pact -- that limit government borrowing to underpin the euro.

"We will propose shortly the activation of the general escape clause under the Stability and Growth Pact. And this initiative has been welcomed by the Eurogroup and the leaders. We stand ready to take further actions," a Commission spokeswoman said.

"We stand ready to take further actions as the situation evolves. The Commission will propose to the Council to apply the full flexibility provided in the EU fiscal framework to allow member states to implement all the measures needed to contain the COVID19 outbreak and mitigate its negative consequences," she said.

"This flexibility allows member states to spend on healthcare system, to immediate containment measures but also medical equipment, increasing hospital capacity and so on so forth," she said.

(Additional reporting by Marine Strauss and Gabriela Baczynska; Reporting by Jan Strupczewski)