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Rebound interrupted as resurgence of pandemic deepens uncertainty

The coronavirus pandemic represents a very large shock for the global and EU economies, with very severe economic and social consequences. Economic activity in Europe suffered a severe shock in the first half of the year and rebounded strongly in the third quarter as containment measures were gradually lifted. However, the resurgence of the pandemic in recent weeks is resulting in disruptions as national authorities introduce new public health measures to limit its spread. The epidemiological situation means that growth projections over the forecast horizon are subject to an extremely high degree of uncertainty and risks.

An interrupted and incomplete recovery

The Autumn 2020 Economic Forecast projects that the euro area economy will contract by 7.8% in 2020 before growing 4.2% in 2021 and 3% in 2022. The forecast projects that the EU economy will contract by 7.4% in 2020 before recovering with growth of 4.1% in 2021 and 3% in 2022. Compared to the Summer 2020 Economic Forecast, growth projections for both the euro area and the EU are slightly higher for 2020 and lower for 2021. Output in both the euro area and the EU is not expected to recover its pre-pandemic level in 2022.

The economic impact of the pandemic has differed widely across the EU and the same is true of recovery prospects. This reflects the spread of the virus, the stringency of public health measures taken to contain it, the sectoral composition of national economies and the strength of national policy responses.

Rise in unemployment contained compared to drop in economic activity

Job losses and the rise in unemployment have put severe strains on the livelihoods of many Europeans. Policy measures taken by Member States, together with initiatives at EU level have helped to cushion the impact of the pandemic on labour markets. The unprecedented scope of measures taken, particularly through short-time work schemes, have allowed the rise in the unemployment rate to remain muted compared to the drop in economic activity. Unemployment is set to continue rising in 2021 as Member States phase out emergency support measures and new people enter the labour market, but should improve in 2022 as the economy continues to recover.

The forecast projects the unemployment rate in the euro area to rise from 7.5% in 2019 to 8.3% in 2020 and 9.4% in 2021, before declining to 8.9% in 2022. The unemployment rate in the EU is forecast to rise from 6.7% in 2019 to 7.7% in 2020 and 8.6% in 2021, before declining to 8.0% in 2022. Continue reading “Rebound interrupted as resurgence of pandemic deepens uncertainty”

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EESC calls for digitalisation of mining to enhance the resilience of European industrial supply chains

Securing sustainable access to raw materials, including metals, industrial minerals and construction raw materials, and particularly critical raw materials (CRM), is of huge importance to the European economy, where at least 30 million jobs depend on the availability of raw materials. The ongoing COVID-19 pandemic is highlighting the importance of digital transformation.

At its September plenary, and at a crucial moment for the implementation of the Green Deal and the EU recovery plan, the EESC adopted an own-initiative opinion on Digital Mining in Europe: New solutions for the sustainable production of raw materials drafted by Marian Krzaklewski and Hilde Van Laere.

In the opinion, the EESC recommends the digitalisation of the EU raw materials sector as a unique opportunity to enhance the resilience of European industrial supply chains, to improve the environmental performance of the minerals sector and to increase transparency and dialogue with citizens and communities affected by mining activities.

The EESC points out the importance of having a global, comprehensive minerals intelligence network to underpin the digital transformation and informed decision-making at EU level. The Joint Research Centre (JRC) is developing and maintaining a European raw materials information system, which is acknowledged by the EESC. Continue reading “EESC calls for digitalisation of mining to enhance the resilience of European industrial supply chains”

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EU calls for a Next Generation EU strategy for SMEs

COVID-19 has been a tsunami for SMEs. The EU’s proposed new SME strategy, which predates the crisis, fails to cope with the huge challenges that have since jumped to the fore, says the European Economic and Social Committee (EESC) in a recently adopted opinion.

COVID-19 has dealt a very serious blow to SMEs across Europe, many of which risk being swept out of business in its wake.

How can the new EU strategy for SMEs, which was put forward before the pandemic and has not been overhauled since, help the sector cope with the aftermath, asks the EESC in an opinion on the European Commission’s draft strategy adopted at its September plenary.

“What we really need at this point in time is a sort of ‘Next Generation EU strategy’ for SMEs, putting together all there is for SMEs under the huge umbrella of loans and grants from the Recovery plan for Europe to mitigate the negative effects of the lockdown, social distancing and health security measures and help businesses recover quickly”, says opinion rapporteur Milena Angelova.

SME organisations to cover the last mile

SME organisations ought to have a pivotal role in the successful implementation of the strategy, as they can ensure that the needs of all different groups of SMEs are met and can shape any follow-up measures that may be needed.

Instead, the strategy mainly relies on existing national SME envoys, a new EU SME envoy and the Enterprise Europe Network.

But the EESC points out that the network of national SME envoys, which represent Member States’ authorities in charge of SME policy, is not fully operational in all Member States. It also stresses that, as SME envoys come from the administration, they need to stay in constant contact with SME organisations and listen attentively to their advice, if they are to play a useful role. Continue reading “EU calls for a Next Generation EU strategy for SMEs”