Ever since its onset from China’s Wuhan city, the Coronavirus pandemic has caused unprecedented socio-economic consequences spreading across the globe. Europe emerged as the epicenter of the pandemic in early April with countries such as Italy and Spain hit hard due to the global health catastrophe. A crisis with no end in sight, the pandemic left the European leadership in shock who failed to its mammoth impact across societies.
The European Commission in its spring 2020 forecast declared that the EU has entered the deepest economic recession in its history. Furthermore, the drop in EU GDP this year is expected to be 7.5% which is far deeper as compared to the 2009 financial crisis. The Commission has noted that the impact of the health crisis is further amplifying the economic divergences in the EU since the consequences vary across the member states.
Notably, the EU member states reacted quickly to the pandemic emergency and stepped their efforts to protect the economy. Most of the European Regional Development Agencies have executed urgent measures responding to the damage to the economy following the COVID-19 outbreak. The European Central Bank, earlier in March, constituted a temporary pandemic emergency purchase programme worth EUR 740 million in an attempt to support the member states. In addition to this, the EU put forward a package of €540 billion consisting of three immediate safety nets for businesses, workers, and EU countries.
Member states have expressed commitment to providing support to sectors facing disruptions and companies facing liquidity shortages. The EU has redirected funds to member countries including €800 million through the EU Solidarity Fund and €37 billion from structural funds to provide aid to the citizens affected by public health crises. Furthermore, €3.1 billion have been unlocked from the 2020 budget to respond to the COVID-19 crisis. Flexibility of EU fiscal rules has been ensured by Europe which will provide support to the healthcare sector and business activities across the region.
As countries are gradually easing the lockdown restrictions, there is still a need for a strong recovery plan by the European Union to mitigate socio-economic ramifications including job losses and the slowdown of businesses. At the same time, the 27 member states of the European Union are working on a trillion-euro common recovery roadmap based on an updated proposal of its next long-term budget. The European Parliament has also called for a massive recovery and reconstruction package which will consist of an increased MFF (Multiannual Financial Framework) keeping in the mind the critical role it will play in economic recovery.