The EU on Friday offered member states "maximum flexibility" to boost spending and subsidies beyond normal rules to help fight the coronavirus.
"The shock is temporary, but we must work together to ensure that it is as short, and as limited as possible," EU Commission chief Ursula von der Leyen said.
"Therefore member states should be encouraged and they should feel comfortable to take all the necessary measures to support the most effective sectors."
The outbreak that began in China has now spread across the globe, with Italy -- the bloc's third biggest economy -- one of the worst hit countries.
The European Commission, the EU's executive arm, has limited firepower to fight an economic downturn, with loosening public spending rules its most powerful tool.
"What we need now is to use flexibility within EU fiscal rules to allow member states to fully respond to the crisis," said EU executive vice president Valdis Dombrovskis.
The message was meant for heavily-indebted Italy, which has announced 25 billion euros in emergency spending, technically violating EU debt and deficit rules.
Von der Leyen also boosted the amount of existing EU budget money to be devoted to the crisis to 37 billion euros.
The spending in question will come from EU subsidies left unspent and rules will be loosened to keep funds flowing.
All eyes are on a meeting Monday of EU finance ministers who between them have more power to build a response sizeable enough to be felt on the markets.
The situation was made more urgent after Christine Lagarde, the European Central Bank chief, spooked markets by saying that managing Italy's public borrowing capacity was not a priority.
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