There is no quick recovery after the historic economic crisis | Free Press

Brussels (dpa) – According to the new EU forecast, the economic crisis in the crown will last longer than expected. After this year’s historic collapse, the European Union’s economy is expected to grow again from 2021, but relatively slowly.

In 2022, the previous strength will not normally be reached again. He never really trusted the “V” – strong recession and equally strong rebound – EU Economic Commissioner Paolo Gentiloni said Thursday. “Now we know for sure that it will not come.”

After a solid third quarter, the forecast figures for 2020 are slightly better than in summer, and Germany is doing slightly better than other countries. However, the recession is unprecedented.

According to this, economic output in the 19 states of the euro zone will collapse by an average of 7.8 percent this year and by 7.4 percent in the 27 states of the European Union. For next year, growth of 4.2 percent is forecast for the 19 euro zone countries and 4.1 percent for the EU-27, and then 3 percent for each of 2022.

According to this forecast, Germany will come out of 2020 better than average with less than 5.6 percent, but the Commission has set lower growth rates of 3.5 percent in the next year and 2.6 percent in the following year. This year’s figures are devastating in Spain (minus 12.4 percent), Italy (minus 9.9 percent) and France (minus 9.4 percent). A faster recovery is sometimes assumed in countries in crisis. The background of both is, among other things, the strong dependence on tourism.

In July, the Brussels authority assumed that economic output in the euro zone would decline by 8.7 percent and in the EU as a whole by 8.3 percent. After a drop of more than 11 percent due to the pandemic lockout in the spring, the economy grew more than 12 percent in the third quarter in both the euro zone and the EU.

Gentiloni now referred to new risks due to the second corona wave and the new pandemic requirements. Therefore, the expected economic recovery next year will be significantly weaker than expected. In July, the Commission had assumed growth of 6.1 percent for the euro zone and 5.8 percent for the EU as a whole. The economic recovery has now been halted and will initially remain incomplete, Gentiloni said.

According to this assessment, the grand finale is yet to come, especially for the European labor market. The unprecedented bridge aid and short-term job aid have slowed the rise in unemployment, but it will continue to rise: in the eurozone from 7.5 percent in 2019 and 8.3 percent this year to 9.4 percent in 2021. a quota of 8.9 percent assumed in the countries of the common currency.

Due to huge expenditures in fighting the crisis, budget deficits and national debt are growing rapidly. Before the pandemic, the average deficit ratio in the euro area in 2019 was 0.6 percent of gross domestic product: this year it will be 8.8 percent, next year 6.4 percent and in 2022 will remain 4.7 percent. According to Gentiloni, the debt ratio will grow to 102 percent of economic output in 2020.

Normally, EU states cannot have a budget deficit of more than 3 percent and a debt ratio of no more than 60 percent. But these rules of the Stability and Growth Pact are suspended because of the crisis, at least until the end of 2021. “That does not mean that it will end at the end of 2021,” said the commissioner.

From their point of view, the agreed € 750 billion program can help against the crisis, which, like the EU budgetary framework, is not yet fully resolved. A quick agreement is crucial, Gentiloni said.

European Green Party politician Sven Giegold sees an even more important crisis fire brigade: the European Central Bank, which took countermeasures shortly after the outbreak of the pandemic with a gigantic bond-buying program. “As was the case during the euro crisis, the ECB is also a stabilizing factor in the crown crisis,” Giegold told the German news agency. “The stability of the euro should teach the notorious critics of the ECB that they are wrong.”