While Europe has went through a number of economic slowdowns before the continent never had an economic shutdown like in the last three months. This has presented new challenges which require different solutions, in view of the unprecedented issues.
On Thursday, European Commission Von Der Leyen presented the roadmap for Europe’s recovery.
“Our economies have been on hold. The supply chains have been disrupted and demand has collapsed. And the truth is that we will not just go back to business as usual soon. Our economies and societies will open slowly, cautiously and gradually. While schools stay shut, most parents will have to continue home-office. And while social distancing measures rightly stay in place, businesses will have to rethink their workplace and way of working. In other words:We will recover but it will take time.”
She added that the virus is the same in every Member State, but the capacity to respond and absorb the shock is very different.
“For instance, countries and regions with economies that are built on client facing services – such as tourism or culture – have suffered way more. We should also not forget that those who were hit first by the virus were often hit the hardest. Because it was the painful experience and the full transparency of Italy and Spain in dealing with the pandemic – that helped others to brace themselves for the impact.
Another pillar highlighted by Von Der Leyen is that “every Member State has supported workers and companies as best as possible – in large part thanks to the European Level being fast and forceful:
We triggered the general escape clause and we gave full flexibility on EU fund and state aid rules. But: it’s also true that each Member State has a different fiscal space – so the use of state aid is very different.”
What we start to observe now is an unlevelling of the playing field in our Single Market.
Therefore, in response, we need to support those, that need it the most, we have to push for investment and reform, and we have to strengthen our economies by focusing on our common priorities like the European Green Deal, digitalization and Resilience.
The European Commission’s President said the EU’s budget (known as the MFF) will be spent across three pillars.
The first pillar will focus on supporting Member States to recover, repair and come out stronger from the crisis.
The bulk of the money will be spent within this first pillar, on a new Recovery and Resilience tool – created to fund key public investment and reforms aligned with our European priorities, the twin transition to a climate-neutral and a digitalised and resilient Europe. This will be done within the European Semester.
President Von Der Leyen said that the recovery and resilience tool will be available to all Member States – whether in the euro area or not – and it will be focused on those parts of the Union that have been most affected and where resilience needs are the greatest. Within the first pillar, the Commission will propose a cohesion top-up. This will be above the usual cohesion envelope within the MFF. This top-up will be allocated based on the severity of the economic and social impacts of the crisis.
The second pillar is about kick-starting the economy and helping private investment to get moving again.
We already knew before the crisis that we also need major private investment in key sectors and technologies; from 5G to Artificial Intelligence; from clean hydrogen to offshore renewable energy.
“This crisis has only made the need greater than it was before. This is why we will strengthen InvestEU. We will also create for the first time a new Strategic Investment Facility. This will help invest in key value chains crucial for our future resilience and strategic autonomy, such as the pharmaceutical sector”, added Von Der Leyen.
Europe must be able to produce critical medicines itself. But for all this, we need healthy companies to invest in. This is why we will also propose a new Solvency Instrument. This will help match the recapitalisation needs of healthy companies who have been put at risk as a result of the lockdown – wherever they are located in Europe.
The third pillar is about learning the most immediate lessons of the crisis.
“Over the last months, we have seen what is important, what has worked well and what needs to be improved. We will strengthen programmes that have proven their value in the crisis, such as RescEU or Horizon Europe. We will create a new, dedicated Health Programme. And we will make sure that we can support our partners by strengthening our instruments for Neighbourhood, Development and International Cooperation and for pre-accession assistance”, she added.
Ursula Von Der Leyen said that the European Union alone cannot heal all the wounds left by the crisis. But we will shoulder our share of the responsibility, by evenly distributing the burden between Member States right now – whilst ensuring that younger generations also reap the rewards of this incredible effort. This task now lies before us, and I am convinced that a united Europe can rise to it.
Comuniq.eu / European Commission