Brussels (dpa) – Support the economy, invest, create jobs: Due to the dramatic crisis in the Crown, the EU Commission has expressly asked member states not to reduce their crisis programs too soon.
Also in 2021, economic and financial policy must remain “supportive,” Commission Vice-President Valdis Dombrovskis said of the autumn economic analysis. However, governments would have to monitor the debt.
The EU Commission regularly reviews the budget drafts of the member states in the autumn and makes economic policy recommendations. This process, known as the “European Semester”, aims to lead to a more uniform economic policy, especially in the euro zone. Thanks to Corona, many things are different this time. The highlights of the result set at a glance:
THE BUDGETARY SITUATION
Due to the pandemic crisis, the usual deficit and debt rules do not currently apply: a maximum deficit of three percent and a maximum of 60 percent debt, each measured against economic output. Most of the 27 EU countries run huge deficits due to high spending and simultaneous economic depression. Federal Finance Minister Olaf Scholz (SPD) is also planning new debts with 96 billion euros for next year.
However, the Commission praises the German budgetary policy. In general, this corresponds to the EU targets formulated jointly in the summer. Scholz said: “Our course is correct in the fight against Corona.” Thanks to the budgetary policy, Germany has “the financial strength to ensure that everyone, citizens, employees and companies can overcome this difficult time,” emphasized the Vice Chancellor.
The International Monetary Fund (IMF) also gave Berlin a good report: “Germany coped relatively well with the first wave of the Covid 19 pandemic.” An early and vigorous political reaction helped mitigate the consequences. The IMF warned that it is now about putting the economy on a sustainable recovery path, protecting the population and the labor market and keeping companies running.
The EU Commission has more concerns about the other big economies of France, Italy and Spain. In France and Italy, the authority criticizes that some of the crisis measures are not limited in time. It also expresses concern about the high level of indebtedness and warns that public finances must remain stable, at least in the medium term.
ECONOMIC IMPACT ON THE UNION
The Commission believes that the pandemic crisis has exacerbated economic disparities. Germany, which is always getting warnings about export surpluses in the EU and is now weathering the pandemic a little better economically than other EU countries, needs to be examined more closely together with eleven other countries for “macroeconomic imbalances”. The Commission is also concerned about the increase in debt ratios between companies and private households. The real estate price momentum could weaken. Banks would run the risk that further problems could arise when repaying loans.
During the pandemic, the number of employees fell by 6.1 million from the end of 2019 to the second quarter of 2020, according to Commission data, the steepest drop ever seen in half a year. The crisis hit young people especially, as the social commissioner Nicolas Schmit said. Millions of fixed-term contracts have been lost. “These numbers are dramatic,” Schmit said. Poverty also grows again.
Faced with the dreaded rising unemployment, the commission recommends investing in higher education and qualifications. Schmit explicitly mentioned home renovation, which could create jobs and, at the same time, promote climate protection.
The Commission recommends the use of all national and EU funds and programs for its financing. These include the aid agreed to in the spring: the Sure short-term work program, loans from the investment bank and potential multi-billion dollar loans from the euro rescue fund ESM. And above all, the agreed EU budget which includes crown aid of 750 billion euros. However, budget decisions are currently blocked by a veto from Hungary and Poland. Dombrovskis called for a quick solution to this. The total of 1.8 trillion euros is urgently needed in the fight against the crisis.