Comparisons diminish the significant and historic efforts taken to boost our economies, and to develop and rollout vaccines at unprecedented speed.
Comparison is inevitable at moments of great challenge. The wisdom of
former US president Theodore Roosevelt that “comparison is the thief of
joy”, comes to mind in contrasts between the size of stimulus packages
and the strength of economic forecasts.
Comparisons diminish the significant and historic efforts taken to
boost our economies, and to develop and rollout vaccines at
unprecedented speed. The 27 countries of the EU have stood together,
ensuring that those most economically affected have been supported and
that all member states have access to vaccines. These co-ordinated
efforts are supporting tens of millions of people.
This unity may come at a short-term cost to the largest and strongest
members of our union, but they and all others benefit from our unity in
the longer term. We have learnt over the centuries of the deep linkages
across our continent and the reality that one country’s growth at the
expense of its neighbours is not sustainable.
To this end, in 2020 alone, Europe implemented budgetary supports
equal to 7 per cent of gross domestic product and liquidity supports of
17 per cent of GDP, while the US stimulus figures were 10 per cent and
7.7 per cent. There is a difference, but it is not as significant as
suggested by some. Critically, a focus on scale understates the size and
transformational nature of the support being provided, particularly for
the EU economy.
Important differences exist. The EU has chosen to focus its response
on protecting employment through job-retention schemes to keep people in
work, rather than relying on direct transfer payments. American state
and local governments, which have had to cut spending as, unlike the
federal government they must balance their budgets, have laid off 1.3m
employees. Europe has maintained public service jobs.
This is because the EU’s supportive fiscal policy stance, combined
with the suspension of fiscal rules and the establishment of a temporary
framework for state aid, have allowed governments to put in place
unprecedented levels of budgetary support. The three European safety
nets, including SURE which has committed €100bn to protect workers
against the risk of unemployment, complement national responses.
The monetary policy decisions and forward guidance from the European
Central Bank, which have preserved favourable conditions for the
economy, are indispensable. The measures taken have protected millions
of jobs and livelihoods, and cushioned the impact of the pandemic crisis
on companies. Their positive effect can be seen in how the rise in
unemployment has been contained compared with the drop in economic
activity.
In addition to these supports, the EU’s Next Generation package and
Recovery and Resilience Facility will result in a further €750bn in
spending beginning this year. This initiative, an emergency grants and
loan programme funded by temporary common debt, would have been
unthinkable before the pandemic.
Eurozone finance ministers are united in the approach that until the
health crisis is over and recovery firmly under way, we will protect our
economy with the necessary support. The US economy is forecast to
return to pre-pandemic levels in 2021 while the EU’s is forecast to do
so by 2022. A year is a long time in the grim duration of this disease.
In response, we have agreed a supportive budgetary stance in the euro
area for 2021 and 2022, the importance of which is reinforced by the
increased coronavirus public health restrictions announced in recent
days.
Actions are important, but their success is all that really matters
to the citizens we serve. The speedy implementation of the RRF, and
additional national measures, will lead our economies through the
Covid-19 crisis. The reality is that most growth forecasts do not
recognise the full impact of the RRF or the national measures. Moreover,
every day we see more people being vaccinated, and we expect to have
over 300m vaccines in Europe by May — a vital step towards normality.
But there is no room for complacency; urgency is paramount. European
economic efforts last year were unprecedented, yet fresh and demanding
challenges approach. We understand this. We are determined to rise to
them.
Analogies of a contest may persist, but this is not a race to the
largest stimulus package. It is the outcomes that matter, the
livelihoods saved and living standards recovered. The fact that the
budget stimuluses in the US and Europe are double those of the 2008
global financial crisis shows that the participants realise the deadly
seriousness of the challenge.
Eurogroup
© Council of the European Union
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