Rapid implementation of EU recovery instrument is key in enduring COVID crisis
Political leaders should avoid any premature unwinding of economic support
EU economic output might be 3% below pre-crisis level by end 2021
Falls in hours worked equivalent to 18 million full time jobs in Q3
Today, BusinessEurope published its Autumn Economic Outlook 2020 with figures suggesting that whilst the economic recovery is underway, it is uneven and uncertain. Even by the end of 2021, the EU economy will likely still be 3% below pre-crisis level.
Whilst official data show only marginal increases in EU unemployment, falls in hours worked are equivalent to 18 million full time jobs in Q3 of 2020. We expect official EU unemployment to increase to around 9% in 2021.
Following publication of the Outlook today, BusinessEurope's Director General Markus J. Beyrer commented: "Following deep falls this spring, the EU economy began its recovery during the summer. But as recent days have emphasised, the path back to pre-COVID levels of economic output is likely to be long, uneven and uncertain. Underlining the challenges ahead, our Autumn Outlook suggests that even by the end of 2021, economic activity will still be around 3% below the pre-crisis level.
Given the resurgence of the virus, a very rapid implementation of the EU recovery instrument is essential in this enduring COVID crisis. At the same time, EU member states must avoid any premature unwinding of measures to support business and workers, such as wage subsidies and tax holidays, which would risk a new recession. With private investment having fallen considerably during the crisis, we need public investment to temporarily fill that gap. This means rapid agreement and implementation of the EU's Next Generation recovery instrument.
This recovery instrument represents both a once-in-a-generation opportunity to transform our economies and a great opportunity to show that Europe can be the solution in times of crisis. Now is not the time to be pressing particular favoured projects, it is the time to unite."
In more detail BusinessEurope's Autumn Economic Outlook shows:
- We expect the EU economy to fall by 7.3% in 2020 as a result of the COVID-19 epidemic and associated lockdowns, followed by growth of 5.0% in 2021, although the second wave of lockdowns and faster spread of the COVID-19 virus than expected in recent weeks clearly poses a downside risk to the forecast.
- The economic impact is divergent across both sectors and geographically. Some EU member states face double-digit GDP drops this year, as opposed to a fall of around 3%-4% in other member states.
- Business investment has been particularly hard hit, evidenced by both strong falls in businesses sentiment and capital good production.
- Whilst official data shows only marginal increases in unemployment, falls in hours worked are equivalent to 18 million full time jobs in Q3. We expect official EU unemployment to increase to around 9% in 2021.