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20 picks of 2020

Introduction

As 2020 draws to a close, it is an opportune time to look back at an extraordinarily challenging year. In celebration of the hard and dedicated work of all of us here at Bruegel, please enjoy a collection of 20 of our highlights including blogs, publication, podcasts and events.

 

From all of us here at Bruegel, we wish you a well-deserved break and all the best for the holidays and the new year.

BLOG HIGHLIGHTS

What should Europe expect from American trade policy after the election?

By Uri Dadush and Guntram Wolff

A Joe Biden Administration would have to decide to what extent to unpick the major United States trade policy shifts of the last four years. A quick return to comprehensive trade talks with the European Union is unlikely and the US will remain focused on its rivalry with China. Nevertheless, there would be areas for EU/US cooperation, not least World Trade Organisation reform.

 

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Without good governance, the EU borrowing mechanism to boost the recovery could fail

By Guntram Wolff

The European Union recovery fund could greatly increase the stability of the bloc and its monetary union. But the fund needs clearer objectives, sustainable growth criteria and close monitoring so that spending achieves its goals and is free of corruption. In finalising the fund, the EU should take the time to design a strong governance mechanism.

 

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Next Generation EU payments across countries and years

By Zsolt Darvas

How much cake does everyone actually get and at what speed? This blogpost estimates the yearly Next Generation EU (NGEU) payments to each EU country at current prices in euros and as a share of GNI.

 

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Climate finance: an agenda for EU coordination with emerging markets

By Alexander Lehmann and Mark Plant

Addressing the challenge of financing the low-carbon transition will require substantial investment in the European Union and in emerging and developing economies. Sustainable finance frameworks have proliferated in advanced and emerging markets but fragmentation of financial flows due to different classification systems and standards for green financial instruments is a real risk. Ensuring consistency should be a core agenda for the new International Platform on Sustainable Finance.

 

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The European climate law needs a strong just transition fund

By Simone Tagliapietra

To deliver on the goals of the European climate law, the European Union needs finally to get coal out of its energy mix: the EU should quicken the pace of decarbonisation whilst delivering on its goal of social inclusion.

 

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PUBLICATION HIGHLIGHTS

The financial fragility of European households in the time of COVID-19

By Maria Demertzis, Marta Domínguez-Jiménez and Annamaria Lusardi

The concept of household financial fragility emerged in the United States after the 2007-2008 financial crisis. It grew out of the need to understand whether households’ lack of capacity to face shocks could itself become a source of financial instability.

 

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Why has COVID-19 hit different European Union economies so differently?

By Andre Sapir

All European Union countries are undergoing severe output losses as a consequence of COVID-19, but some have been hurt more than others. Factors potentially influencing the degree of economic contraction include the severity of lockdown measures, the structure of national economies, public indebtedness, and the quality of governance in different countries. With the exception of public indebtedness, we find all these factors are significant to varying degrees.

 

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European Union recovery funds: strings attached, but not tied up in knots

By Jean Pisani-Ferry

Ensuring effective recovery spending is a high-stakes challenge for the European Union, with the potential for derailment because of fuzzy objectives and overloaded procedures. The EU should work with member countries to identify limited policies that will maximise the impact of EU investment, while accounting for spillovers.

 

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Green certificates: a better version of green bonds

By Dion Bongaerts and Dirk Schoenmaker

The current design of green bonds means they aren’t fulfilling their potential. We propose an alternative: issuance of regular bonds with attached green certificates that ensure earmarking for green purposes. The new design would reduce financing costs and in turn would provide incentives to start a greater number of environmentally-friendly projects.

 

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Greening the recovery by greening the fiscal consolidation

By Ben McWilliams, Simone Tagliapietra and Georg Zachmann

In the wake of COVID-19, some economic recovery policies will help green the economy – for example, energy renovation of buildings. But there are limits to the share of stimulus that can be explicitly green. The European Union should therefore also green the fiscal consolidation by setting out the path to much higher carbon prices than today. This would guide investment and provide revenues to help the fiscal consolidation.

 

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THE SOUND OF ECONOMICS HIGHLIGHTS

China’s economy after COVID-19

The first country to be hit by the current pandemic, China has been at the forefront of the fight against COVID-19. What have been its impacts on the Chinese economy? What does it represent, more broadly, to the global economy? Are global supply chains really starting to be put into question? Today, Giuseppe Porcaro is joined by Alicia García-Herrero and Yiping Huang, Professor of Economics and Finance at the Peking University.

 

REOPENING EUROPE - Reopening future?

Imagining a society, an economy and politics cohabiting with the virus and eventually overcoming it. This is the last episode of the summer feature of the Sound of Economics recorded as part of the Reopening Europe project. Between the 12th and the 27th of June, we travelled over 2700 kilometres through the Netherlands, Germany, France, Austria, Slovenia and Italy to collect voices from the ground during the weeks when the borders were reopening after the COVID-19 spring lockdown. Since the start of summer, the pandemic has continued to ravage the globe, and in Europe we are currently seeing a resurgence of infections. The next few months continue to be uncertain in terms of medical and economic consequences. Given this context, the Reopening Europe project assumes additional layers: documenting the seemingly ephemeral moment of the summer reopenings, and reflecting about the hopes and wishes of Europeans at a unique moment. That is why, in this concluding episode of this feature, we reflect about the future. Not as an escapist wishful thinking, but as an attempt to start re-imagining a society, an economy and politics cohabiting with the virus and eventually overcoming it. For this reflection Giuseppe Porcaro is joined by Bruegel’s senior scholar Alicia Garcia Herrero and Rutger Sjögrim, the architect that built the space ship featured in the movie Aniara (2018), and member of the Secretary studio in Stockholm.

Sizing up the world’s largest trade deal

What should be Europe’s strategy towards the Regional Comprehensive Economic Partnership(RCEP)? On November 15 2020, the 10 members of the Association of Southeast Asian Nations (ASEAN), Australia, China, Japan, New Zealand and South Korea signed the Regional Comprehensive Economic Partnership (RCEP), creating the world’s largest free-trade bloc in terms of gross domestic product. Bruegel fellows from around the world - Uri Dadush, based in Washington DC; Alicia Garcia-Herrero based in Hong Kong and Suman Bery based in India, bring their knowledge and geopolitical expertise to a heated discussion on this deal, hosted by director Guntram Wolff. What is the RCEP really about? Who will benefit? Why did India withdraw from negotiations on the deal? What implications will it have for Europe and the United States? And more importantly, what should they do?

 

The future of EU-UK relations (again!)

On 15-16 October the European Council will take stock of the implementation of the withdrawal agreement and review the state of the negotiations on the future EU-UK partnership. Leaders will discuss preparatory work for all scenarios after 1 January 2021. The timetable is very tight, with October seen as the last deadline for reaching an agreement that could then be ratified in time for entry into force by the end of the current transition period. In this live recording session of The Sound of Economics, Bruegel’s scholars took a step back and provided the background, as well as outline the key issues at stake necessary to follow the discussions at the Council and understand the ongoing negotiations. We also engaged in an informed debate with the audience on the post-Brexit scenarios. The podcast host, Giuseppe Porcaro, was joined by Maria Demertzis, André Sapir, and Guntram Wolff. To read more about Bruegel’s research on Brexit, please check: https://www.bruegel.org/tag/brexit/

 

The political economy of climate transition

Climate transition is hotly debated in EU circles as it impacts all areas of policy: from the ambitious climate targets set by the President of the European Commission with the European Green Deal, to the discussions of the next budget of the Union and the recovery plan from the current pandemic.

 

The topic is especially important for 2021 with a new US administration more likely to engage on climate change, a commitment for carbon neutrality in 40 years by China and the delayed COP26 under the leadership (or not) of the United Kingdom. Any European debate is certain to have an important impact on a regional and national level, but will also influence the global trajectory of climate policy.

 

In this episode of the Sound of Economics, Giuseppe Porcaro hosts Heather Grabbe, director of the Open Society European Policy Institute in Brussels, Piotr Arak, Director of the Polish Economic Institute from Warsaw and Simone Tagliapietra, research fellow at Bruegel (joining from Italy) for a conversation on the political economy of the climate transition as covering the European Green deal, the concept of “green industrial policy”, and distributional challenges of decarbonisation.

 

Monetary policy after the pandemic - Bruegel Annual Meetings

This special session marked the end of Jean-Claude Trichet’s mandate as chair of Bruegel. The session gave the opportunity for a conversation between Jean-Claude Trichet and other leaders that have shaped monetary policy in the past decade. They looked at the past, the present and how monetary policy is likely to develop in the aftermath of COVID-19.

 

Lecture: The future of globalisation - Bruegel Annual Meetings

In this lecture Dani Rodrik argues that the model of hyperglobalization we have been pursuing is unsustainable and that we have an opportunity to embark on a sounder, healthier globalisation. He outlines his views on what such a globalisation might look like. This lecture was chaired by Andre Sapir, Senior fellow at Bruegel.

 

Building an inclusive future for workers in Europe - Bruegel Annual Meetings

Technological development, and in particular, digitalisation, has major implications for labour markets and the nature of work itself. There is a rise in alternative types of work that today’s European welfare states have not yet had the chance to adapt to. The transformation of the way we work is only likely to speed up because of the pandemic. While there is still uncertainty surrounding the long-term economic implications of the pandemic, we know that Europe’s digital future, and its relationship with its workforce in particular, will be wholly impacted, and it will require an inclusive, cross-sector response moving forward.

 

From playing field to player: Europe’s strategic autonomy as our generation’s goal

At this event we welcomed Charles Michel, President of the European Council to speak about Europe’s strategic autonomy. Following his keynote speech he engaged in a conversation with Guntram Wolff, Director of Bruegel, and took questions from an online audience.