European Union: Road to Digital and Sustainable Post-Pandemic Economic Recovery

Coronavirus pandemic

Ramifications of the Coronavirus pandemic have massively hit the European economy, resulting in the worst recession since World War 2. Businesses in the sector are suffering both short and long term impacts from the global financial crisis triggered by unprecedented disruptions in the supply chain and restrictions of transport movement across the bloc.

With the EU policymaker working on a gradual reopening of the economic activities in the bloc, businesses have to gear up to face three transition processes (as per a report by EURACTIV) which includes, surviving the pandemic crisis, digital transformation, and progress toward a sustainable economic system. 

In the age of social distancing and work-from-home orders, businesses with a digital presence were fortunate enough to survive in such a crisis as compared to other companies lacking digital operations. In the coming months, it will become necessary for businesses across Europe to add e-commerce capabilities in order to recover from the recession. There are reportedly on 17% of businesses that sell online in the EU, as per Eurostat.

Experts have asserted the need of high-impact entrepreneurs and innovators in supporting Europe’s efforts in rebuilding a sustainable economy along with job creations. However, amid the ongoing economic downturn, these entrepreneurs were gravely impacted with disruptions in supply chains and investment pipelines drying up. 

On May 27, the European Commission proposed the creation of a comprehensive recovery plan for the revival of the EU economy in order to mitigate the economic and social impact of the pandemic lockdown. With the plan, the Commission proposed to raise €750 billion on the markets and channel them to sustainable economic recovery across all Member States. Furthermore, the long-term EU budget for 2021-2027 is also expected to bring the total financial firepower of the EU budget to €1.85 trillion. Within the proposed €750 billion ($847 billion) economic rescue package, European policymakers have earmarked a part of investments for digitalizing the industries, along with boosting data and cloud infrastructure, artificial intelligence, and 5G networks.

“It’s an absolute necessity to invest in the digitalization of companies so that they are more competitive,” European Central Bank Vice President Luis de Guindos said in May. 

Another crucial component of the post-pandemic recovery will be the Capital Markets Union (CMU), which can help the European economy emerge from the crisis stronger with the process of mobilizing citizens’ investment in the capital markets.

There’s lot at stake for European recovery on the revival of small businesses of the bloc. In March 2020, the European Commission adopted certain measures in a bid to boosting the European industries, which also included a staunch SME Strategy. Taking note of the potentials of SMEs, the Commission has proposed to allocate over €300m to a number of companies that will support the sustainable recovery plan for Europe with breakthrough Green Deal innovations under the Enhanced European Innovation Council (EIC). 

As predicted by the International Monetary Fund, the EU economy is expected to shrink by 7.1% this year, which is more than any other region across the world. Moving into the post-pandemic recovery phase, the policymakers are hoping to reopen its external borders to foreigners by July in a bid to loosen economic strangleholds caused by the pandemic.

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