Category: Economy

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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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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”

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Circular economy : “With a new impetus for sustainable development”

The COVID-19 crisis has created the conditions for circular products and services to become the norm in Europe, says the EESC. In a recent opinion on the new EU Circular Economy Action Plan, the EESC urges lawmakers to ensure the circular economy finds a place and resources in the overall “greenprint” for Europe’s recovery.

The COVID-19 crisis can be a great opportunity to start up again with new impetus for sustainable development, says Antonello Pezzini, rapporteur for the EESC opinion on the new EU Circular Economy Action Plan, adopted at the July plenary session.

The vision of circular products and services becoming the norm, which was behind the plan put forward by the European Commission back in March as COVID-19 was looming, is becoming more tangible as the crisis unfolds. With the new Action Plan, the circular economy can really become a pillar of the Green New Deal, says the rapporteur.

The Action Plan takes in much of the advice already pioneered by the EESC in its 2016 opinion on the first Circular Economy Package, particularly in areas such as eco-design, reparability, premature obsolescence and secondary raw materials, and as such is very welcome. However, broader measures will also be needed, in the EESC’s view. Continue reading “Circular economy : “With a new impetus for sustainable development””