That the European Union will fall into a deep recession by 2020 as a result of the corona crisis is inevitable. Whereas as recently as May it was predicted that the eurozone economy would shrink by 7,7 per cent , that was revised to 8.7 per cent during the summer forecast. The eurozone ‘ s expected recovery in 2021 currently stands at 6.1 per cent.
Latvian Eurocommissioner Valdis Dombrovskis indicated at a press conference on 7 July that the economic consequences of the lockdown were more severe than they had initially estimated.
Despite the May and June figures suggesting that in Europe we are worst behind us globally, this is certainly not the case. Thatthe coronavirus is still causing enormous damage is also evident from the words of Paolo Gentiloni, EU Commissioner for the Economy. “Globally, the death toll from the coronavirus has now reached half a million people, a number that continues to rise every day – at an alarming rate in some parts of the world. And these projections show the devastating economic effects of that pandemic. The policy response in Europe has helped cushion the shock for our citizens . Yet this too is a story of increasing disparities, inequality and insecurity. That is why it is so important that we quickly reach an agreement on the recovery plan proposed by the Commission. This way, we can give our economies new confidence and new financing at this crucial moment .”
Southern Europe
As expected, southern Europe seems to be the worst hit. The figures for Spain (-10.9 per cent), Italy (-11.2), and France (10.6) were all revised downwards in the summer forecast. Gentiloni indicated that Italian economy is likely to start recovering from the third quarter 2020 . The economy of the hardest-hit EU countries is expected to grow by 6.1 per cent in 2021 .
Recovery Fund
The European Union wants to help the worst-hit countries with the help of a €750 billion recovery fund . The Netherlands does not fully agree and believes that only loans should be provided. The European Commission has now proposed to pay out 500 billion through subsidies and 250 billion through loans. On 17 and 18 July, European leaders including Prime Minister Rutte will meet to negotiate the package of European measures.
Source: EC.europa.eu
