Opinion

Europe needs a Covid-19 Recovery Programme

Policymakers need to think long-term and start planning a broad investment scheme to reboot the European economy.

By: , , and Date: March 27, 2020 Topic: Macroeconomic policy

The Covid-19 pandemic represents an unprecedented challenge for Europe’s healthcare systems, and a major shock for the continent’s economy. After the initial focus on the immediate crisis response measures, policymakers need to also think long-term and start planning a broad investment scheme to reboot the European economy once the virus has been defeated. That is, it is high time to start considering a European Covid-19 recovery programme.

Why such a plan? As the pandemics rapidly spread across Europe and the world, it has become evident that a V-shaped economic recovery is unlikely. On top of the initial supply shock, this crisis is inevitably having second round effects. Demand is quickly falling as consumers postpone or even cancel their consumption. As citizens worry about the future, they increase their precautionary savings.

The immediate crisis measures aim to preserve as much as possible productive structures so that the economy can reboot once lockdown measures are reduced. But a European Covid-19 recovery programme is still needed to boost the recovery and prevent an L-shaped downward shift in gross domestic product, given the damage done.

The question is how such a plan should be structured. Should it focus on the sectors most badly hit by the crisis? Or should it instead use this moment of brutal destruction for the emergence of new and different economic structures? Should relief measures be given to low income households? Should there be a pan-European plan to boost digital and green investment? What industrial policy lessons should be drawn from the dramatic undersupply of medical equipment and Europe’s dependency on China for production of critical products? And should the relief plan be a pan-European one?

The crisis is an opportunity for Europe to shape its future. Companies and individuals are adapting daily to the challenge with new and creative solutions. It is now time to debate the future shape of our economies. A bold Covid-19 recovery programme to boost Europe’s economy is needed. It should be the focal point of the debate on the future.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to [email protected].

Read article More on this topic More by this author
 

Podcast

Podcast

Taming inflation?

What are the implications of prolonged inflation?

By: The Sound of Economics Topic: Macroeconomic policy Date: May 25, 2022
Read about event More on this topic
 

Past Event

Past Event

How can we support and restructure firms hit by the COVID-19 crisis?

What are the vulnerabilities and risks in the enterprise sector and how prepared are countries to handle a large-scale restructuring of businesses?

Speakers: Ceyla Pazarbasioglu and Guntram B. Wolff Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 25, 2022
Read article More on this topic More by this author
 

Podcast

Podcast

The cost of China's dynamic zero-COVID policy

What does zero-COVID mean for both China and the global economy?

By: The Sound of Economics Topic: Global economy and trade Date: May 11, 2022
Read about event More on this topic
 

Past Event

Past Event

What is in store for Euro area economies?

ECB Executive Board Member Philip Lane discusses the outlook for Euro area economies.

Speakers: Maria Demertzis and Philip Lane Topic: European governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 5, 2022
Read about event More on this topic
 

Past Event

Past Event

From viruses to wars: recent disruptions to global trade and value chains

How have events in recent years impacted global trade and value chains and how can we strengthen these against future disruptions?

Speakers: Dalia Marin, Adil Mohommad and André Sapir Topic: Global economy and trade Date: April 27, 2022
Read article More on this topic More by this author
 

Opinion

China’s Covid policy to be year’s largest economic shock

Beijing’s ‘dynamic zero-Covid’ policy could devastate the domestic economy, but the effects will also be felt globally.

By: Alicia García-Herrero Topic: Global economy and trade Date: April 26, 2022
Read article
 

Opinion

European governance

How to reconcile increased green public investment needs with fiscal consolidation

The EU’s ambitious emissions reduction targets will require a major increase in green investments. This column considers options for increasing public green investment when major consolidations are needed after the fiscal support provided during the pandemic. The authors make the case for a green golden rule allowing green investment to be funded by deficits that would not count in the fiscal rules. Concerns about ‘greenwashing’ could be addressed through a narrow definition of green investments and strong institutional scrutiny, while countries with debt sustainability concerns could initially rely only on NGEU for their green investment.

By: Zsolt Darvas and Guntram B. Wolff Topic: European governance, Green economy, Macroeconomic policy Date: March 8, 2022
Read article Download PDF More on this topic
 

Blueprint

European governance

Greening Europe’s post-COVID-19 recovery

This Blueprint includes some of the Group’s most prominent voices on the different aspects of the multidimensional issue of green recovery.

By: Simone Tagliapietra, Guntram B. Wolff, Georg Zachmann, Laurence Tubiana, Laurence Boone, Antoine Dechezleprêtre, Jean Pisani-Ferry, Klaas Lenaerts, Thomas Wieser, Ottmar Edenhofer, Mirjam Kosch, Michael Pahle, Ian Parry, Robert N. Stavins, Sabine Mauderer and Tomasz Koźluk Topic: European governance Date: February 23, 2022
Read article More on this topic
 

External Publication

The Euro in 2022

An annual review of the euro published jointly by Fundación ICO and Fundación de Estudios Financieros to expand knowledge, raise awareness of the single currency, and suggest ideas and proposals for strengthening its acceptance and sustainability.

By: Grégory Claeys, Maria Demertzis and Fernando Fernández Topic: Macroeconomic policy Date: February 17, 2022
Read article Download PDF More on this topic
 

Policy Contribution

European governance

The failure of global public health governance: a forensic analysis

The emergence of the Omicron variant in November 2021 was a stark reminder of the high overall cost of the persistence globally of extremely unequal access to vaccines and treatments. What are the reasons for these failures of global collective action?

By: Anne Bucher, George Papaconstantinou and Jean Pisani-Ferry Topic: European governance Date: February 17, 2022
Read about event More on this topic
 

Past Event

Past Event

A debate on fiscal rules and the new monetary strategy

Presentation of the Yearbook of the Euro 2022.

Speakers: Maria Demertzis, Fernando Fernández, Gonzalo García Andrés, José Carlos García de Quevedo, Pablo Hernández de Cos and Jorge Yzaguirre Topic: European governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 17, 2022
Read article More on this topic
 

Blog Post

Venture capital: a new breath of life for European entrepreneurship?

Whether the dynamism of European venture capital of the past two years can be sustained and kick start a credible alternative to bank finance in the European Union remains to be seen.

By: Maria Demertzis and Lionel Guetta-Jeanrenaud Topic: Banking and capital markets Date: February 10, 2022
Load more posts