The Coronavirus pandemic has caused unprecedented ramifications to the European Union, worst of all to its economy. While the EU member states reacted early to the health crisis by closing its borders, the pandemic response lacked solidarity and coordination between the nations. Significantly, the range of socio-economic effects of the crisis differs across the member states, the consensus in the EU response could have visibly helped in moderating the implications on its economy particularly.
Despite its shortcomings, the EU remains an important element in the world economy. Brussels – home of the EU’s most prominent institutions including the European Commission, Parliament, and European Council – has emerged one the largest and most powerful forces in the world economy. The EU has been working as a unified economy in the world market with its currency Euro giving a strong competition to the US Dollar as a global currency.
In 2018, the EU became the second-largest economy in the world both in nominal terms (after the United States) and according to purchasing power parity or PPP. In the wake of the Brussels effect, Europe became one of the world’s most affluent consumer markets compelling MNCs to comply with its regulatory policies. European legislations provide more flexibility to the global market than any other region.
After several failed attempts, the EU is making some gradual progress in supporting the economy of its member states.
Being one of the regions which were hit hard by the COVID-19 infections, EU’s Italy and Spain became some of the first nations to ease their restrictions after flattening the curve noticeably. Other European countries such as Germany, Hungary, and Poland also followed suit in lifting restrictions cautiously. The European Central Bank (ECB) is relaxing its limited mandate to maintain financial stability with its Pandemic Emergency Purchase Program (PEPP).
At the same time, the European Commission is working exhaustively to bring a proposal for the 2021-2027 long-term budget – Multiannual Financial Framework(MFF) – for the European Union that will help in alleviating the aftershocks of the global health pandemic. According to the Eurogroup, the MFF will play a crucial role in the recovery of the economy of the bloc, and the commission president Ursula von der Leyen has asserted that it would comprise “a sound balance between grants and loans”. As soon as the budget is passed, funds will be allocated in boosting the staggering economy as rest of the member states will work on emerging from the lockdown step-by-step.