Europe’s economic response to the Covid-19 pandemic must not make the same mistakes as it did during the 2008 financial crisis, say MEPs in two draft reports, one on economic policies and the other on social policies in the euro area, put to the vote at the European Parliament’s plenary session on the evening of Wednesday 21 October.
Satisfied that the European Parliament has finally made an announcement on the ‘European Semester’ budgetary process, Joachim Schuster (S&D, Germany), rapporteur for the first report (see EUROPE 12583/26), welcomed the European response to the crisis consisting of a public debt waiver by the European Commission on behalf of the EU27 through the SURE instrument to combat short-time working (see other news) and the Next Generation EU Recovery Plan.
He predicted a sharp rise in public debt, which he believes will require a change in the EU’s fiscal rules. “Part of the debt targets will have to be modified. We will need clear rules for public debt, but unrealistic and unattainable targets are harmful, too”, he considered.
This statement echoes the recent position of the European Fiscal Board (see EUROPE 12585/22).
The author of the report on social policies in the euro area, Klára Dobrev (S&D, Hungary), stressed the need to protect low-income citizens through a “minimum wage” in the EU and increased budget spending “on education and health services”.
EU Commissioner for the Economy Paolo Gentiloni said that the arrival of a second wave of the pandemic increases uncertainty about the medium-term economic situation. “The human and economic costs are enormous” and require continued budgetary support for growth with the freezing of the Stability and Growth Pact also in 2021.
Scheduled for the end of October, the Commission proposal establishing a European framework for minimum wages will aim to “make sure that work pays”, while respecting national frameworks, he added (see EUROPE 12585/33).
On Wednesday, the IMF predicted that the recession would amount to -8.3% of GDP in the euro area and -7.0% of GDP in the EU. By way of comparison, Mr Gentiloni pointed out that in 2009 the recession in the euro area was half as deep, being “-4.1%”.
See the ‘Schuster’ draft report: https://bit.ly/31pY9eo
See the ‘Dobrev’ draft report: https://bit.ly/37qmswE (Original version in French by Mathieu Bion)