Jean Monnet -one of the Founding Fathers of the European Union on the challenges awaiting Europe in the next period: said that the law will face a number of crises. And the future of the region will be determined in the light of the solutions adopted to deal with those crises.
In a report published by the Daily Telegraph, author Tom Rees highlights the challenges ahead for the EU this year. After the region’s acute crisis in 2020 caused by the covid-19 pandemic and Brexit. The writer pointed out that the corona crisis caused the debt value of some countries in the region to rise to more than 100% of GDP. So, an economic recovery plan of 750 billion euros is expected to be implemented.
Jessica Hinds, the Europe economist at Capital Economics, believes that given the high debt burden of this pandemic. It will be extremely difficult to reach a debt ratio of 60% of GDP. French ministers say that a return to the rules on debt and budget deficits-which was adopted before the pandemic. And stipulate that member states ‘ budget deficits should not exceed the 3% ceiling. And that the size of the debt is 60% of each country’s GDP – is unthinkable in the current period.
Changing the way, we deal with the crisis
The ECB left the deposit rate at a record low of 0.5%, and in return relied on buying bonds and providing lenders with extremely cheap liquidity.
The ECB is likely to follow in the footsteps of the US Federal Reserve by revising its previous inflation policies. This means allowing maximum inflation rates to be reached before later tightening policies, says ING Group finance expert Bert Cullen.
The economic landscape after Merkel
The writer says that Germany is preparing for a post-Chancellor Angela Merkel who will leave her party in good shape. Ahead by about 20 points in the polls, after successfully managing the worst economic and health crises. In addition, Nomura economist George Buckley stresses that the German elections will not only define the financial situation in post-pandemic Europe. But will represent a radical change in European politics as a whole. One of the most prominent candidates for the CDU presidency, Friedrich Mertz, is described as the” German Donald Trump “. And is likely to return the party to its more conservative roots. According to the author, the formation of the next government in Germany will be a decisive factor in determining the extent to which Berlin is committed to spending on European recovery programs in the coming period.
The crisis in Spain
with political volatility and high debt levels, some fear that Spain will join Italy for the lowest ranking in the eurozone economic performance table. Spain – which relies on tourism and consumption – was the hardest hit among EU economies in 2020. And its economy is expected to start recovering this year as vaccine distribution begins. Spain’s unemployment crisis deepened, rising to 16 percent, and the coronavirus crisis fueled disagreements between the central and regional governments.
Greece and recovery hopes
2020 was supposed to be the year Greece’s economic recovery begins with the coming of the new pre-opening government. But, Prime Minister Kyriakos Mitsotakis ‘ plan to increase GDP growth by attracting foreign investment and cutting taxes has stalled because of the coronavirus.
Also, The author emphasizes that the Greek economy has not yet recovered from the recession of the past years as a result of the sovereign debt crisis. And the corona pandemic has made things worse. Greece’s sovereign debt is expected to reach 200% of GDP, with Athens ranked second globally after Japan. With bond yields at record lows, the Greek government is expected to be forced to borrow at record levels. In contrast, the arrival of the vaccine in Europe and the recovery of the tourism and travel sector over the coming summer could be one of the factors that could pull Greece out of the bottleneck. And save it-along with other European countries – from another difficult summer.