Eurozone optimistic about recovery but wary of lag behind China and US
Eurozone finance ministers were optimistic on Friday about the prospects for an economic recovery from the pandemic-induced crisis, but said Europe should work hard to avoid long-term economic damage and not fall behind on China and the United States.
“Things are going very well in Europeâ¦ investments are increasing and growth forecasts are really well oriented”, declared the French Minister of Finance, Bruno le Maire, entering the ministerial meeting. “All over Europe, growth is back.”
Forecasts from the European Commission show the EU of 27 countries will reach pre-pandemic growth levels by the middle of 2022, with some, like Germany and France already there by the end of this year and others. , like Italy or Spain only at the end of 2022..
But China and the United States will rebound faster, according to forecasts, and the euro area will soon have to act to boost its growth potential if it is to remain among the best performers, the French finance minister said.
âDo we want to play in the Premier League, or do we want to lag behind China and the United States?â said the Mayor.
âWe need more activity, more investment in new technologies. We need to improve Europe’s growth potential. Getting back to normal is not the right ambition. From a historical point of view, this is the key decision that we will have to take in the coming months, âhe said.
The European Commission will assess over the coming months the reform and investment plans of EU governments to make their economies greener and more digital.
These programs will serve as the basis for the disbursement of cheap loans and grants from the EU recovery fund of 750 billion euros ($ 917 billion), with the first disbursements expected towards the end of July.
The unprecedented joint borrowing exercise will help growth, German Finance Minister Olaf Scholz said, hailing it as a landmark venture that will make the bloc stronger and bring it closer to a fiscal union that the markets have since advocated for. long time.
“Even when the crisis is over, we will see that we have taken a big step forward towards a budgetary union, which will make us stronger to fight against crises”, he declared at the start of the negotiations. âEurope will come out of this crisis better than it was before,â he said.
But optimism aside, ministers also worried that the pandemic, which plunged the bloc into its deepest recession last year, could hurt future growth prospects if not addressed.
The eurozone has seen these kinds of long-term “scars” following the financial crisis of ten years ago which had long-term negative effects on investment and in some countries more than others. .
âWe are very aware of the challenges many Europeans are currently facing, very aware of the scars and the risks of damage, and we will do our best to overcome them,â said Prime Minister Paschal Donohoe.
Source: Reuters (written by Jan Strupczewski; edited by Hugh Lawson)