While European nations are slowly relaxing the previously strict lockdown measure, the economic recovery of the past couple of months is still daunted by a question mark. As it makes things worse, experts believe the European Union may face an existential threat of an uneven economic recovery from the novel coronavirus pandemic.
A few days ago, Parliament called on the European Commission to present a major economic stimulus plan to help mitigate the shock from the coronavirus and settle on a sustainable future. This was expected as European nations are on the verge of witnessing an economic contraction of 7.5% in 2020 than the 2009 fallout. Although the actual scale of this impending recession is yet to be estimated, leaders fear that gradual reopening may do little to counter this effect immediately. And there always exists a possibility of another significant wave COVID-19 pandemic. The current situation is already bleak due to people losing jobs or sources of livelihoods under the lockdown. With disruptions in the supply chain, budget deficits, lack resources, decrease in revenue generation, tax relaxation, the surge in welfare expenses in medicine, research, and other, recovery and revival from the second pandemic wave may not be further easy and led irreversible fatal blow to the GDP.
As different countries have a different rate of recuperation due to varying resources to their aid, economic recovery will vary too. The hardest-hit countries like Greece, Italy, Spain, and Croatia – face falls in economic output (GDP) over 9% in 2020, while Germany’s economy is set to contract by 6.5% and Austria’s by 5.5%. Meanwhile, countries have fluctuating amounts of state resources to rescue ailing companies and pay workers’ wages on the grounds of emergency measures that have become easier since Brussels relaxed state aid rules to deal with the crisis.
As the EU is planning its next long-term budget and the answer to the current COVID-19 crisis to outline developments over the coming years, it makes sense to add recovery measures to the plans. However, the Parliament also insists that the recovery package should come on top of the needs of existing EU schemes and not take funding away from them. If the agreements fail to meet Members of the European Parliament (MEPs), warn that they shall be forced to use their power to veto the long-term budget.
While the recovery packages shall be deployed on the scale of priority of countries that urgently need them, the MEPs expect them to be given in the form of grants instead of loans as too much reliance on loans would push countries deeper into debt. Though, countries beg to differ with this proposal. The countries Germany, the Netherlands, and other northern countries prefer to give support through loans; others like France, Spain, and Italy are seeking some financial transfers. Further, it is suggested that the recovery package be financed by issuing long-term recovery bonds guaranteed by the EU budget.
Meanwhile, the EU is expected to focus on climate action and have a digital strategy, MEPs also insist on adding that a new EU health program to make sure that medical supplies are available across the EU in times of need. Besides, they demand to have their say on decisions concerning the recovery fundas a matter of democratic legitimacy.
Hence in the context of rapid solutions from the EU to protect people and their jobs, Parliament President David Sassoli said, “We want to do it quickly, but we want to do it well,” COVID-19 has claimed 318,775 lives out of 4,817, 105 cases so far.