#SpringForecast – ‘The EU has entered the deepest economic recession in its history’ Gentiloni

The EU has entered the deepest economic recession in its history. The economy will contract by 7.4% this year and 7.7% in the eurozone. By comparison, the 2009 recession the economy contracted by 4.5%. The economy should rebound in 2021 but will not make up for the loss made in 2020.

Economy Commissioner Paolo Gentiloni (pictured) presented the conclusions of the EU’s economic forecasters in his Spring 2020 economic forecast. The findings are shocking and show the scale of the challenges facing Europe in the weeks and months ahead has Europe eases the measures used to contain and limit the impact of the coronavirus pandemic.

The Spring 2020 Economic Forecast projects that the eurozone economy will contract by a record 7¾% in 2020 and grow by 6¼% in 2021. The EU economy is forecast to contract by 7½% in 2020 and grow by around 6% in 2021. Growth projections for the EU and eurozone have been revised down by around nine percentage points compared to the Autumn 2019 Economic Forecast.

Executive Vice President for an Economy that works for People Valdis Dombrovskis said: “This is a symmetric shock: all EU countries are affected and all are expected to have a recession this year. The EU and member states have already agreed on extraordinary measures to mitigate the impact. Our collective recovery will depend on continued strong and coordinated responses at EU and national level. We are stronger together.”

Economy Commissioner Paolo Gentiloni said:“Europe is experiencing an economic shock without precedent since the Great Depression. Both the depth of the recession and the strength of recovery will be uneven, conditioned by the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country’s financial resources. Such divergence poses a threat to the single market and the euro area – yet it can be mitigated through decisive, joint European action. We must rise to this challenge.”

In response to a question on whether he was worried about how a mixed economic recovery across the EU would result in some countries being reluctant to do ‘what is necessary,’ the Commissioner said that he was confident because states now understood that the current crisis was different. 

Gentiloni said that while the human solidarity the journalist referred to was very important, he said that governments have greater economic awareness, indicating that this was having a more influential role. He said that the prospect of damaging the level-playing field and making the single market more fragile had consequences that won’t only be felt by the ‘frugal’, the southern, the eastern or the western  EU states but would very bad for all Europeans.

He said that it was therefore not a question of looking backward, and that Europe needed a forward-looking discussion to help the European economy to rebound and to do this using common tools were needed. He said that this was understood by governments and public servants, and why he was confident about the recovery initiative that would emerge in the next few weeks. 

The full European Commission press release is available in all languages here.

The Spring 2020 Economic Forecast is available here.

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