BusinessEurope Economic Outlook Spring 2020 - Strengthening the economic recovery
The EU, in common with the rest of the global economy, is presently experiencing the deepest recession since the Great Depression of the 1930s. The imposition of comprehensive lockdowns has caused national economies and world trade to come to a sudden halt.
Whilst the situation remains very uncertain, our central forecast is for the EU economy to fall by 7.9% in 2020, and rebound with 5.8% growth in 2021. This implies that the economy will be operating just slightly below its pre-crisis level towards the end of 2021.
Both the EU and its member states have responded rapidly with unprecedented measures to support businesses through the crisis, and as a consequence, increases in unemployment in the EU have been much more modest than in the USA. But a co-ordinated fiscal stimulus remains essential to strengthening the recovery and minimising the long-term scarring to the EU economy.
Our analysis suggests increased fiscal stimulus by member states as part of a co-ordinated EU recovery plan could increase output and reduce the likelihood that the long-term economic impact of the crisis damages long-term EU economic convergence. In order to ensure a stronger recovery and address the economic crisis that is now materialising, BusinessEurope has set out the need for an EU recovery plan focussing on:
- An ambitious and coordinated fiscal stimulus to support demand, a rapid deployment of EU investment funds as part of an ambitious and co-ordinated EU fiscal stimulus;
- A revitalised and open single market and a strengthened single currency;
- Fair and free trade and investment and support for multilateral solutions;
- Strengthened EU governance to ensure EU financial support increases implementation by member states of growth and employment-enhancing structural reforms and upward convergence.