How are we in Europe?
What is the (economic) health of Europe? The post of Servidori
Where are we in Europe? Draghi's indications are taken from the precise reports that are developed in Brussels, but of which we do not have systematic knowledge.
Here are some essential passages of a document drawn up by the Department for Economic, Scientific and Quality of Life Policies that conform well to Draghi's analysis and proposals.
As EU Member States embark on a progressive path of re-confinement, the economy slips into recession and the question of the proportionality of public health measures and their economic consequences is increasingly present in the public debate. Until a vaccine (or effective treatment) for the COVID-19 disease is found and used, post-COVID-19 societies will have to coexist with the virus and strike a balance between the social constraints arising from health protection measures and need to mitigate as much as possible an enormous economic shock, which if not adequately addressed, could have unpredictable social and political consequences. It is crucial to put in place a forward-looking economic strategy, which includes a credible recovery plan and strengthened public health structures.
The reconstruction package should have the European Green Deal and digital transformation at its center in order to revive the economy, improve its resilience and create jobs, while contributing to the ecological transition, promoting sustainable economic and social development, including the strategic autonomy of our continent. The COVID-19 crisis has shown above all the importance of joint European action. Although public health is primarily the responsibility of the Member States, the European Parliament has called on the Commission and Member States to act together and to accept the challenge and to ensure that the Union emerges stronger from this crisis. In particular, a coordinated post-blockade approach in the EU should be ensured. Valuable document prepared by the Department for Economic, Scientific and Quality of Life Policies Directorate – focuses on de-confinement strategies and EU measures to support economic recovery: an update of ongoing advisory work related to COVID is provided -19 for the ECON, EMPL, ENVI, ITRE and IMCO committees, a document of which an interesting and particularly useful summary is prepared for a comparison between Draghi's intervention and the prospects that we hope will be addressed. The DIMENSION OF THE ECONOMIC SHOCK has brought considerable uncertainty to the economic prospects of all countries, particularly in the medium term. The economic impact of the pandemic in 2020 will be significant across the European Union (EU) and not always proportional to the incidence of Covid-19. During the first two months of the pandemic, all Member States banned public gatherings, closed (totally or partially) schools and the non-food trade, made telework more or less the norm in all areas where it was possible and introduced border / travel restrictions. More than half of the Member States declared a state of emergency.
These measures have delayed the spread of the virus and relieved the pressure on health systems, while causing considerable damage to economic and social life. In its summer 2020 economic forecast, published on 7 July 2020, the European Commission warned of an even deeper recession with wider divergences (Euro – 8.7%, Spain -10.9%, France -10 , 6%, Italy -11.2%, while the Bundesbank is aiming for a contraction in Germany of 4.8% in the second quarter. The greater uncertainty, however, relates to the possible pace – time and length – of the recovery , which risks being asymmetric, as opposed to an originally largely symmetrical Covid-19 economic shock. As a result, experts are expected to continually revise their views on the economic outlook, up or down, as we learn more about the magnitude of the economic impact. Currently, these reviews are very broad, which greatly complicates the development of an adequate, timely and targeted policy based on standard techniques, used in regular forecasting practices by the European Commission, the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD) or national authorities. Largely due to such a large number of unknowns, other key experts – including the European Central Bank are turning to scenarios, rather than forecasts and generally worked out up and down: upside scenarios assume that progress Doctors, such as greater testing capacity, greater therapeutic capacity and the discovery of a vaccine in the second half of 2020, will lessen the fear of businesses and consumers. This would facilitate a more rapid loosening of restrictions and thus allow for a quicker recovery activity. As a result, GDP continues to contract strongly in 2020, but the recovery in 2021 looks stronger. Downside scenarios include a longer period of lockdown – and more restrictive measures – and tend to establish how long-standing structural issues evolve into a financial crisis, as limited credit supply amplifies deleveraging in the industry private.
With declining public and private investment, productivity growth slows and potential output deviates from previous trends. Under these circumstances, GDP levels could be well below the pre-Covidi-19 baseline for years to come. In June 2020, the macroeconomic projections of the European Central Bank (ECB) assumed only partial success in containing the virus, with a certain resurgence of infections in the coming quarters, which require persistent containment measures. However, the ECB notes that such measures are expected to incur lower economic costs than during tight lockdowns, due (hopefully) to learning and behavioral responses from authorities and economic agents. The pandemic impact of Covid-19, for better or for worse, will likely reinforce many trends that had begun to manifest in advance. Productivity growth has slowed sharply in the euro area in recent decades, as in all advanced economies. The consequences are far-reaching. They include lower long-term real interest rates, weaker potential growth and, most importantly, slower earnings in living standards due to the impact of Covid-19 on businesses and households, and growing labor market imbalances. and layoffs. These consequences are among the root causes of the deprivation of political voting rights in the EU and in major parts of the Western world. An important part of the document addresses in particular, the death rate in terms of coVID / 19 as it correctly states that national definitions of Covid-19 deaths may result in a substantial lack of comparability of Covid-19-related mortality across countries and that the estimate of excess deaths could be used more widely to monitor the true scale of the impact of the Covid-19 pandemic with a minimum time frame. A substantial excess mortality rate in April 2020 due to the Covid-19 pandemic appears from the comparison of 2016-2020 mortality rates related to seasonal flu, pandemics and other public health threats for a select group of countries and for all age groups. The excess mortality rate is observed mainly in the age group of 65, but also in the age groups between 45-64 and 15-44 years. This period includes part of the flu season and the start of the Covid-19 pandemic.
The huge economic costs of the big blockade could still be lower than the medical costs generated by a potentially uncontrolled spread of the virus. According to the World Health Organization (WHO) and the European Medicines Agency (EMA), no Covid-19 vaccine will be developed before 12-18 months after the explosion. The ECB baseline (mid-2021) is consistent with this estimate. Extra time should be taken into account to authorize the vaccine, produce it in sufficient quantities and make it widely available. In the absence of a vaccine or treatment, a probable public health scenario describing the state of equilibrium of our society assumed that, for the next 12-18 months, Covid-19 could become an endemic virus around the world and so will it. is currently registering. There could be new outbreaks of Covid-19 in infections in the EU, which could intervene (and to varying degrees) to stress national health systems. At the moment, it is unclear whether recovery from Covid-19 guarantees immunity and for how long, as successive waves of infections have been detected. Due to the high infectivity of Covidi-19, positive cases should be compared with the maximum capacities of intensive care units (ICUs) in all EU Member States. This involves monitoring and predicting pandemics and achieving some form of dynamic balance between the number of new positive patients and ICU healthcare capacity. New social distancing rules have been introduced in all Member States to contain the spread of the virus and ease the burden on the health system. In such a stable pandemic emergency scenario, the Member States, in coordination with the European Union, should adopt public health measures, which would be at the basis of a "new normal".
Any action in this regard should be science-based and public health at the center. The measures should also be proportionate, so that, whenever possible, safe alternatives should replace general prohibitive measures. In particular, a permanent evaluation of all measures should be carried out in light of new scientific evidence and the possible resurgence of new infections. In particular, it is essential to avail in each State of the scientific advice of the European Center for Disease Prevention and Control (ECDC) which suggests a list of non-limited measures: – Introduction of large-scale, rapid and reliable molecular tests (for example for at least 0.1% of the population per day), by taking a random sample of the entire population to monitor their status. To control subsequent outbreaks of the disease, temporary and intermittent measures of social distancing should be used. The efficiency of such social detachment measures for virus control should be carefully and monitored locally and evaluated in the field. Temporary increase in ICU beds, medical devices, staff and facilities: the new Post Covid-19 company should remain in balance by keeping the maximum number of ICU beds occupied below the maximum capacity of each national health system (bearing in mind that a sufficient number of intensive care places must remain available for other emergencies, not related to Covid-19). Medical devices and beds available on each day must be at least equal to the number of positive Covid-19 cases found 1-14 days earlier in the total population, multiplied by (i.e. adjusted to the percentage of) the risk of severity of showing general symptoms respectively requiring hospitalization and some acute symptoms. Areas dedicated to Covid-19 for patients should be identified in hospitals and targeted training for medical staff dedicated to Covid-19 should become the norm. The most vulnerable groups should be protected longer, while those diagnosed or people with mild symptoms should remain quarantined and treated properly. The introduction of effective Covid-19 antiviral drugs could make the scenario milder. Reducing the severity of the disease and its hospitalization rate would allow national health systems to free up some capacity currently reserved for the treatment of severe Covid-19 patients (beds and equipment for hospital units, medical staff, medicines and therapies). The greater the number of people immune to Covid-19, the lower the health capacity required. Based on the reproduction rate of the Covid-19 virus, potentially 60% of the population must obtain immunization to ensure immunity to work.
Standard serological tests should also be used extensively to detect immunized patients in order to develop a more efficient and granular contact tracing policy. For their own safety, citizens could be invited to consent to trace as a way to be allowed to take effective and more targeted social detachment measures, and to warn, prevent and contact trace to help limit the spread of the disease. Social detachment measures could be modulated on a temporal and / or regional and / or local basis, under the conditions of rigorous monitoring of the increase in the number of positive cases and the number of beds available in ICU in hospitals, in particular in the case of subsequent explosions. Effective social distance could be optimized by the efficient and combined use of vaccines and antiviral drugs (once they are available), group immunity, and measures that target vulnerable groups, diagnosed people or people with mild symptoms. Technology – including Artificial Intelligence – could also help bring the new living conditions closer to those of pre-Covid-19. In the coming months, the compatibility of social detachment measures and close proximity economic activities such as restaurants, large events or public transport, with some business models that may require adaptation to the new social context, will have to be tested. It can also be hoped that many other activities will be safely restarted and become operational, based on the new social norms on public health. Until the development and use of a vaccine or effective anti-viral treatment, the public health emergency remains and the necessary containment measures will continue to have a negative impact on the economy. Taking into account the significant damage to the economy, it is crucial to put in place a forward-looking economic strategy, including a credible recovery plan and strengthened public health structures. On the short-term financial stability front, the EU reacted swiftly to the pandemic emergency by adopting stabilization and other accompanying measures, including: ECB decisive action, various European Investment Bank measures, activation the escape clause of the Stability and Growth Pact, authorizations for state aid, the easing of capital requirements for banks, the European Stability Mechanism Pandemic Crisis Support (PCS) credit line, the Covid-19 Response Investment Initiative , the EU Solidarity Fund and a VAT waiver. When drawing up the economic strategy and the recovery plan, the trade-off between easing the current difficulties and the pressure on future generations must be taken into account. To this end, a balance needs to be struck between a debt-financed increase in current public spending and the effect on future sovereign balance sheets, where debt service will lead to tax increases and / or reductions in government spending. While stressing the need for measures to protect vulnerable workers and businesses from the worst effects of the sudden drop in activity through unemployment benefits, subsidies, transfers, low-interest loans and tax deferrals, experts argued that the post-economy -lockdown will have to combine protection and reallocation in a context in which the nature and duration of shocks are highly uncertain, unemployment is initially very high and there are few opportunities to find new jobs especially for young people, companies have difficulty in obtain credit, many companies are likely insolvent or not viable, and government interventions address the limited reality of public resources. In its resolution of 15 May 2020, the European Parliament called for a € 2 trillion Recovery and Transformation Fund (RTF) to be financed through the issuance of long-term recovery bonds guaranteed by the EU budget, and a diversified repayment schedule.
The Federal Republic is expected to become operational as soon as possible this year and operate through loans and (mostly) through grants, direct payments for investments and shares. In order not to endanger the recovery path, the RTF should not further burden the national treasuries. In this regard, the European Parliament has expressed its readiness to consider maintaining Member States' gross national income contributions at current nominal levels in exchange for the creation of new own resources. The RTF should be geared towards transforming the economies of Member States and strengthening their resilience through the pooling of strategic investments in the European Green Deal, the digital agenda and the achievement of European sovereignty in strategic sectors, such as the health sector. This will counteract the widening divergences between Member States and prepare our economies for the future.
Responding to the European Parliament's request, Commission President Ursula von der Leyen proposed at the plenary session of the European Parliament on 27 May 2020 a new generation EU Emergency Facility (NGE) of € 750 billion to temporarily increase the EU budget (raising funds on financial markets) and a corresponding enhanced multiannual financial framework (MFP) for 2021-2027 of € 1,100 billion. At the heart of the recovery plan will be a new recovery and resilience instrument (RRF), which, together with the cohesion policy and the just transition mechanism, will be instrumental in achieving these important goals. The RRF will be incorporated into the European Semester. Member States need to present credible and detailed recovery and resilience plans as part of their National Reform Programs. In addition, the strengthening of the European Agricultural Fund for Rural Development will support rural areas in making the necessary structural changes in line with the European Green Agreement. While a majority of Member States initially reacted positively, some national governments asked for changes to the Commission's proposals, in particular as regards the size of the EU budget, the balance between grants and loans and the time frame for the repayment of loans. Furthermore, in line with the European Parliament resolution of 15 May 2020, it is of paramount importance to establish a new autonomous European health program, as has happened in the past: the EU should strengthen its strategic autonomy in the health sector and reduce the its dependence on imports from third countries for essential medicines. Currently 90% of the active pharmaceutical ingredients (APIs) for generic drugs come from India and China.
Europe is India's largest buyer of paracetamol API and imports about 12,000 tons per year; while India is dependent on China, which supplies nearly 70% of bees for Indian drug makers. While many APIs for innovative medicines are manufactured in Europe, even when APIs are manufactured in the EU, most of the raw materials, for both generic and innovative medicines, come from China. by the Commission in autumn 2020, faces this problem. The action for health autonomy, proposed by Parliament, should help to produce, store and coordinate the production of critical medicines and pharmaceutical products and equipment in the EU. It should also pool and coordinate digital manufacturing capabilities such as 3D printing, which can help by replacing the necessary equipment, the Commission has budgeted € 9.4 billion to strengthen health security and prepare for future health crises.
The new program will invest in prevention, crisis preparedness, the procurement of vital medicines and equipment, as well as improving long-term health outcomes. Furthermore, the Covid-19 crisis demonstrated the need to further strengthen efforts and strengthen coordination at the EU level. While under the current Treaty framework Member States have the primary responsibility for managing public health crises, measures taken by individual Member States could harm the interests of others if the measures are inconsistent with each other or based on diverging risk assessments. The objective of coordinating the response at Union level should therefore seek to ensure, inter alia, that measures taken at national level are proportionate and limited to the risks to public health and do not conflict with law and obligations set out in the TFEU, such as those relating to travel and trade restrictions. Lessons learned during the Covid-19 crisis made a good case for addressing the spillover effects of uncoordinated (or poorly coordinated) responses by strengthening the coordinating role of EMA and ECDC, enabling them to deliver a rapid and effective response, based on common European standards for interoperability of health data (eg the harmonizing method for having comparable statistics on pandemic cases). In its resolution of 17 April 2020, the European Parliament called for a substantial strengthening of the competences, budget and staff of ECDC and EMA to allow them to coordinate medical responses in times of crisis. The impact of the pandemic demonstrates the economic and social logic of a strong, sustainable and forward-looking political strategy. The risk of discarding the internal market and the Schengen acquis, a geographical area without borders in which people, goods, services and capital move freely and where economic operators compete on merits is the economic heart of the EU and is fundamental for the recovery. The internal market, as one of the main achievements of the European Union, must be central to the EU response. All internal market instruments should be put at the service of immediate and medium-term responses to the crisis. A dispersed and divergent approach among member states would not be the right answer to the Covid-19 crisis.
In the first two months following the outbreak, almost all Member States introduced border / travel restrictions. While the Commission first took swift action to enable the free movement of essential goods and services and to conceal national bans on the export of medical supplies, border closures or restrictions have seriously undermined the smooth functioning of the internal market . Following a major disruption to the free movement of goods and the transport sector, on 13 May the European Commission proposed a phased and coordinated approach to restore freedom of movement and lift internal border controls within the EU. As the health situation in the EU improved, the Commission recommended on 11 June to Member States to lift these restrictions by 15 June 2020.
Regarding the Green Deal and the digital agenda – investment factors for economic recovery: questions arise about the impact of the Covid-19 health crisis on the EU's flagship strategy for European greening, even if all three leading European institutions have confirmed their willingness to tackle the post-Covid-19 era without changing the ambitious climate agenda. In a joint declaration of 26 March 2020, the Council asked the Commission, in consultation with other institutions, to draw up a roadmap accompanied by an action plan on economic recovery and sustainable growth, integrating inter alia the transition green and digital transformation. The Commission reiterated that the European Green Agreement remains the EU's growth strategy, as proposed by the European climate law. The European Parliament in its resolution of 17 April 2020 stressed that the recovery and reconstruction package "should have at its core the European Green Deal and digital transformation to kickstart the economy, improve its resilience and create jobs. and at the same time contribute to the ecological transition, foster sustainable economic and social development – including the strategic autonomy of our continent – and contribute to the implementation of an industrial strategy that preserves the EU's key industrial sectors; stresses the need to align our responses with the EU objective in the event of climate neutrality ”.
Short-term emergency responses to address Covid-19 must be aligned with ambitious long-term climate goals, such as the new greenhouse gas emission reduction target for 2030 (expected in September 2020) and decarbonisation in 2050. We need digital acceleration, research and innovation: the pandemic will have to deal with an acceleration and digital transformation driven by key technologies and innovations such as Big Data analytics, 3D printing and advanced robotics. Companies that have adapted to the digital age will be rewarded. The gap between companies that have invested in innovation and those that have not done so will widen, particularly once public support is eliminated. Public investments and the increase in funds for research and innovation can stimulate productivity growth over time.Remember that for industrial policy: the overall budget proposed by MFF-NGE for direct industrial policy instruments amounts to a great many resources: Horizon Europe 94.4 billion euros; transition fund 40 billion euros; European space program 13.2 billion; Digital Europe € 8.2 billion; European Defense Fund € 8 billion; International Thermonuclear Experimental Reactor (ITER) € 5 billion; Euratom € 1.8 billion. Just to name a few. These figures have sparked a debate on the impact of Covid-19 within the ITRE committee and will be the subject of intense negotiations between the three institutions in the coming months. The globalization of manufactured goods could partly go in reverse, as companies shorten supply chains and governments force manufacturers of medicines and other strategic goods to produce on shore. A post-pandemic need for fiscal stabilization could hold back demand growth as more government intervention in economies could undermine the supply side. However, the positive factors are likely to prevail in most countries. Only countries that are sufficiently well governed and that put their hand to fiscal policies in the wake of the Covid-19 shock can reap all the benefits of greater technological diffusion. In addition to the health dimension, the crisis dramatically affects workers, workers and self-employed workers, the new generations are the most damaged. While the pandemic raised immediate occupational health and safety concerns, particularly for service workers with frequent customer contact, lockdown measures across the EU and around the world have raised a major crisis. economic with rising unemployment.
The Commission, together with the Member States, should take all necessary measures to keep as many jobs as possible and to ensure that the recovery is based on upward economic convergence, social dialogue and improved social rights and working conditions with targeted measures for those who perform precarious forms of work. Unemployment in the EU is expected to rise from 6.7% in 2019 to 9.0% in 2020 (Eurozone: 7.5% in 2019 to 9.6% in 2020) 29 and the loss of working time is expected to 10.5% globally and 11.8% in Europe in the second quarter of 2020 .. To address what is one of the biggest labor crises of recent times, the EU has taken steps to address immediate needs and mitigate negative impacts on various policy areas, including employment and social policy.
These include measures to mitigate job or wage losses, as well as measures to support the most vulnerable or disadvantaged groups who may be handicapped by the current situation. Supporting efforts to keep people employed and avoid bankruptcies is an ethical and social imperative and, in the words of Commissioner Schmit, a solid investment in human capital towards faster and better economic recovery. In its resolution of 17 April 2020, the European Parliament welcomed the Commission's new support to mitigate unemployment risks in an emergency proposal (SURE) and called for its swift implementation and the launch of a permanent European program of reinsurance for unemployment. However, it was noted that most national short-term work measures, as also supported by SURE, mostly benefit people in permanent employment until the outbreak of the emergency. Conversely, those who work part-time, precariously or informally are most at risk, as they often lack social security and health insurance coverage. Although this segment of the workforce is more numerous in low-income countries, informal workers significantly affected could reach 15 to 30% of the workforce in EU Member States as well.
It therefore seems essential that, in its coordination and complementary measures, the EU remains particularly vigilant towards the most vulnerable groups and the growing risk of poverty. A eurofound survey in March 2020 showed that nearly 40% of people in Europe report their financial situation worse than before the pandemic. Almost half indicate that their families cannot make ends meet and more than half report that they cannot maintain their standard of living for more than three months without an income. The crisis has also exacerbated less obvious inequalities, notably the "digital divide" in stable broadband access and the hardware needed to work / learn from home, which threatens to leave already disadvantaged families further behind. The new digital agenda will have to address these issues if, as widely strained, further digitization is part of the catch-up strategy. In conjunction with real difficulties and gloomy economic prospects, a recent survey reports that trust in EU and national governments has significantly decreased, even among traditionally pro-European populations such as those of France, Italy or Spain, in a context in which the EU remained silent and did not play a visible role at the outbreak of the health crisis. On the other hand, finding an effective and timely response to the fallout from the bloc that transcends national differences could offer the opportunity to regain the necessary credibility of the EU.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/europa/ on Wed, 19 Aug 2020 03:40:48 +0000.