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Since I last stood in this room just one month ago, we have unfortunately seen a dramatic worsening of the pandemic. The gravity of the situation was described to us very clearly this afternoon by Dr Andrea Ammon of the European Centre for Disease Prevention and Control.
360 case notifications per 100,000, up from 250 the previous week. All indicators going in wrong direction: the percentage of tests that is positive; the proportion of elderly cases; the increasing number of hospitalisations; deaths up by 50% in a week.
The European Commission is mobilising all means at its disposal to support and coordinate Member States in tackling this second wave.
Of course it is Member States that are in the front line in the struggle against the pandemic and they have been found themselves once again having to take far-reaching measures to flatten the curve.
The third quarter GDP data published by Eurostat on Friday showed that the rebound over the summer was remarkably strong. However, our consumer confidence indicator for October provided first evidence, and it is not the only one, of a slowdown in the pace of economic activity: it decreased by 1.6 points compared to September – its first decline after five consecutive months of increases.
Manufacturing has so far remained relatively strong, as shown by the Purchasing Managers Index data published yesterday, and this illustrates a point that emerged clearly in the discussion we had today – that it is mostly the services sector, and in particular tourism, hospitality, entertainment and culture that is going to be hardest hit in this second wave.
The tightening of containment measures will evidently have an impact on economic activity. There is some reason to believe that the impact will be smaller than in Spring. For instance, companies and employees are better prepared for and experienced with working remotely.
But at the same time, there is uncertainty surrounding the duration of this second wave.
As you know, I will be presenting our autumn economic forecast on Thursday morning, so I will not enter into greater detail tonight as regards the economic outlook.
I will however draw two key conclusions from the discussion we had today.
First, we need to see a swift agreement between the Council and Parliament on Next Generation EU. Speeding up implementation of the Recovery and Resilience Facility and tapping the facility in full via both grants and loans would maximise its potential contribution to a coordinated economic policy stance.
Second, the general escape clause provides Member States with the leeway on the fiscal side that they need at this time – and they should use it. Fiscal policy should remain supportive in 2021, not only in the euro area as a whole but in all euro area Member States.
Concerning the discussion on a digital euro, the Commission shares the many aspects of the analysis contained in the recent report by the European Central Bank. The main reasons that could make a digital euro necessary in a near future are the digitalisation of the European economy, the decline of the role of cash as a means of payment and the protection of our monetary sovereignty against any possible future dominance of non-euro denominated forms of digital money in the euro area.
Of course a lot of further work is needed on this topic and the Commission stands ready to cooperate closely with the ECB in the coming months in exploring these opportunities and challenges it implies.
Lastly, just a few words on the state of play regarding the three safety nets that were agreed in April, which are potentially worth €540 billion.
First, we have a fully operational SURE. Almost 90% of the SURE funds are already earmarked and the first disbursements took place last week, following our very successful first market issuance, which was oversubscribed more than 13 times.
17 Member States have agreed to be supported by the SURE instrument and I am proud of the success of the implementation of this instrument by the Commission. It is showing the success of the Eurogroup's April decision.
Second, we have a fully functional ESM Pandemic Crisis Support, though no Member State has made use of this so far, But we are encouraging Member States to use all of our instruments.
Third, we have the EIB Pan-European Guarantee Fund. For this to become operational, the Commission needs to receive State aid notifications from all participating Member States. We have urged all governments to treat this as a priority so that this tool can also be effectively deployed and start providing much-needed support to SMEs.