Battered Europe needs a full fiscal union to drive its economic recovery

Name: Drive-through Christmas market helps German town raise holiday spirits during coronavirus lockdown
Uploaded: 2020-11-16T12:30:11.000Z
Duration: 3 min 1 s
Description: Drive-through Christmas market helps German town raise holiday spirits during coronavirus lockdown

Signs are already pointing to an uneven economic recovery across the continent. Stronger fiscal stimulus is needed to revitalise domestic demand, but Europe must also open its doors to faster export-led growth, especially with major trading partners like China

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An employee tidies a table on an empty terrace at Piazza Navona in Rome on October 23, before a coronavirus curfew was imposed. Photo: TNS

David Brown

Published: 8:30pm, 16 Nov 2020Updated: 10:36pm, 16 Nov 2020

Europe stands at a crossroads, facing critical decisions about its future. Crippled by the Covid-19 pandemic, battered by recession and riven by internal political friction, the European Union has to focus on the best way to beat the crisis and achieve full recovery.

There are deeper problems to solve, though, as Europe’s regional differences deepen. Germany’s economy thrives while many of its EU partners lag behind on relative performance measures like growth, employment and prosperity. Europe might enjoy common political and monetary goals but it is still crying out for the full fiscal union that could create much closer European integration.

A stronger Europe working in harmony should be more amenable to the idea of building better bridges with major trading partners like China to foster a faster export-led recovery. It is time for Europe to start mending fences and go for growth.

European growth is already bouncing back from the worst of the pandemic nightmare earlier this year. But worries remain that the wealthier economies, especially Germany, will emerge leaner and fitter than their fellow EU partners once the crisis blows over, leaving even more acute economic divergences.

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Drive-through Christmas market helps German town raise holiday spirits during coronavirus lockdown

According to the European Commission’s autumn forecast, EU gross domestic product is projected to grow 4.1 per cent in 2021 after an expected 7.4 per cent drop in output this year. Growth may be bouncing back but the EU’s unemployment rate is still set to keep rising, to 8.6 per cent next year as the aftershocks of the pandemic continue to be felt.

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