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EU playing catch-up after slow start on recovery

By Harvey Morris | China Daily Global | Updated: 2021-05-20 09:06
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A large European Union flag lies at the center of Schuman square, outside the European Commission headquarters, on the eve of Europe Day, commemorating the declaration made by Robert Schuman in 1950, in Brussels, Belgium, May 8, 2021. [Photo/Agencies]

European states are struggling to bounce back from a pandemic-induced recession that has left them trailing major economies such as China and the United States.

A resurgence of COVID-19 over the winter months and a slow start to the rollout of the European Union's vaccination plan pushed its inner core of 19 eurozone countries into recession for a second straight quarter.

The outlook contrasted with that in China, which bounced back after taking stringent measures, and in the US, where the economy rebounded despite mishandling of the initial response to the virus.

French Finance Minister Bruno Le Maire was among those who blamed the European picture on slow progress in implementing a 750 billion euro ($916 billion), EU-wide recovery plan agreed to in July.

"We were very efficient last year in the adoption of the European recovery plan," he said in late April. "Since then, we have lost too much time. China has resumed its growth. The US is booming. The EU must remain in the race."

Last year's unprecedented deal required the EU's 27 member states to prepare their own national plans in order to tap into their share of the borrowed funding.

The ambitious program appears, however, to have run into the familiar brick wall of EU bureaucracy. The European Commission has set conditions on national plans and has to approve them once they are drawn up and ratified by individual member states.

With some governments having scrambled to meet an April 30 deadline to present their plans, they may still have to wait until July when the commission approves them.

In some member states, there was even resistance to the plan. In Finland, which is due to receive 2.9 billion euros, politicians and the public were divided over a program that some argue favors less-affluent southern European states.

In Italy, which is eligible for the largest injection of funding-more than 200 billion euros-the government almost missed the deadline after reports that the commission was unhappy with aspects of the national plan.

The Brussels bureaucrats are insisting on detailed and coherent plans that take into account the move toward a post-pandemic green economy, a digital transformation and action on sustainable jobs growth.

Some national leaders have expressed impatience over bureaucratic procrastination. France's President Emmanuel Macron said, "The US was more innovative, more ambitious; it dreamed more than us and it spent more money to innovate faster and stronger."

The project is the latest test of the EU's ability to work together for the common good. Another such test was the decision in June last year by member states to establish a joint mechanism for acquiring COVID-19 vaccines.

That was also an enterprise that was initially stymied by bureaucracy, with officials slow to establish early cast-iron deals with potential vaccine makers.

European Commission President Ursula von der Leyen said in February: "We were late to authorize. We were too optimistic when it came to massive production and perhaps too confident that what we ordered would actually be delivered on time."

The EU can boast that it is now catching up and may even beat the UK, which was quicker in securing supplies, in a race to vaccinate all adults by the summer. That would be a classic example of the bureaucratic tortoise overtaking the more freewheeling hare.

Although no corner of the continent completely escaped the impact of the pandemic, the economic picture was mixed as Europe exited the first quarter.

Overall, eurozone growth was down 0.6 percent following a 0.7 percent drop in the previous three months. However, while Germany took the biggest hit among the EU's largest economies, the French economy actually grew in February by a modest 0.4 percent.

Worst hit overall was Portugal, which experienced a particularly severe winter resurgence of the virus. With pandemic restrictions gradually being eased, the 27 are looking forward to a revival of economic activity, with southern states focusing on the tourism sector on which some are heavily dependent.

There is also optimism that a return to something like normal life will unlock the savings that some, at least, have accumulated during the lockdown.

The European Central Bank estimates that, barring unforeseen setbacks, growth could reach 4 percent this year.

The EU may have been slow off the starting line in securing its post-pandemic recovery, but at least it looks set to avoid the policy of austerity with which it confronted its financial crisis a decade ago.

Its leaders may have learned the lesson that slashing public spending in that crisis contributed to diminishing the resources it needed to rely on to better confront the latest one.

Harvey Morris is a senior media consultant for China Daily UK. The views do not necessarily reflect those of China Daily.

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