EU countries take multiple measures to boost the economy

Recently, European countries have resumed production and production one after another. Driven by factors such as large-scale economic stimulus policies, a number of economic indicators have shown a positive trend. Some experts believe that in view of the fact that the epidemic is still not over, European countries still need to focus on the balance between epidemic prevention and economic resumption.

As many European countries advance the “unblocking” policy in an orderly manner, the European economy has begun a gradual recovery process. The European Central Bank recently predicted that the European economy is expected to rebound in the third quarter of this year.

Economic data has improved

"Today the restaurant is back in business. We have made careful preparations and look forward to returning to normal as soon as possible." On June 8, a seafood restaurant called "Oyster Shell" in the center of Brussels, Belgium, reopened. Staff Jelena stood in front of the restaurant wearing a mask, ready to receive guests.

On the first day of resumption of work, the restaurant put most of the tables and chairs outside and launched a special lunch of 15.9 euros, but there were not many guests who came to eat at lunch time. The restaurant owner told reporters: "The epidemic has caused a huge impact on the catering industry. Our restaurant has been closed for more than two months and has been under a lot of pressure. Now it is significant good news to resume business."

According to the third phase of the Belgian government’s resumption of production and production plan, from June 8th, restaurants, bars, etc. will resume business, but must strictly comply with health and epidemic prevention regulations, such as maintaining a distance of 1.5 meters between diners, each table does not exceed 10 People, restaurant staff must wear masks, etc. In addition to the catering industry, cultural and sports activities and domestic tourism have also resumed. The Belgian princess Astrid and Prime Minister Wilmesse have also recently reopened the ribbon opening for the iconic Brussels Atomic Ball Tower, which is a "platform" for the tourism industry. The Belgian government announced that it will resume the opening of the border to the European Union, the countries of the Schengen area, the United Kingdom and other countries from June 15.

European countries such as the Netherlands, Germany, France, Greece, Luxembourg, and Italy have also recently introduced and orderly promoted a phased plan for resumption of production. A number of economic indicators have begun to show signs of recovery, and the decline in manufacturing has slowed down significantly. Optimism has improved and consumer confidence is gradually recovering.

According to data released by market research agency IHS Markit recently, the Eurozone's manufacturing purchasing managers index (PMI) in May was 30.5, which has rebounded sharply from 13.5 in April, but it still has not reached the 50 line standard. The British "Financial Times" reported on the 7th that with the resumption of production and the resumption of production in European countries and the resumption of business and consumer activities, the most difficult time for the European economy has passed.

The economic prosperity index released by the European Union in May has increased by 2.9 to 66.7 compared with the previous month. Among them, the economic prosperity index of the euro zone increased by 2.6 to 67.5, and the EU employment confidence index rose by 11.3 to 70.2. The European Commission said that this means that the economic recovery signal has appeared, but the employment confidence index is still at a historical low.

Stimulus policies have been introduced

Although some economic activities are slowly recovering, the impact of the epidemic continues. Recently, many European countries have issued a series of fiscal and monetary stimulus policies, committed to stabilizing the economy.

The European Central Bank recently held a monetary policy meeting and decided to expand the scale of its emergency asset purchase plan from 750 billion euros to 1.35 trillion euros, greatly exceeding market expectations. The ECB’s asset purchase plan will grow at a rate of 20 billion euros per month, and an additional 120 billion euros of temporary quota will be added before the end of the year. Debt purchases will continue until at least June 2021 to support the financing of the real economy.

European Commission President Von Delaine recently proposed to the European Parliament to establish a “recovery fund” totaling 750 billion euros. This fund is mainly used to support member countries to invest and reform, and to restart the EU economy by stimulating private investment. The “Restoration Fund” will be linked to the EU’s long-term budget from 2021 to 2027, and will be allocated through specific projects in the EU budget, of which 500 billion euros will be free grants and 250 billion euros will be loans. If this plan is passed, the EU's next round of long-term budget will reach 1.85 trillion euros.

In addition to the aid plan of 540 billion euros reached by the European Council before this year, the total financial funds for the EU level to respond to the epidemic and stimulate the economy will reach 1.29 trillion euros, and the total amount of economic stimulus funds is expected to reach 2.64 trillion euros. Von Delaine expressed the hope that strong action at the EU level will inject momentum into the EU's economic recovery and growth.

Germany has recently passed an economic stimulus plan totaling 130 billion euros, and has previously issued a 750 billion euros package of economic bailouts; France announced that it will provide 45 billion euros of financial assistance to companies and employees affected by the epidemic and provide loans to corporate banks. 300 billion euros of national guarantees; Italy has released about 750 billion euros of liquidity after the introduction of the 80 billion euros emergency rescue plan, and provided loan guarantees to companies in difficulty; Spain, Portugal, Netherlands, Croatia, Sweden, Norway, etc. Other EU member states have also introduced economic rescue and stimulus plans of varying sizes to restore the economy and boost growth.

In response to the auto and aviation industries that were severely hit by the epidemic, many European countries have also introduced various support measures. The French government recently announced that it will provide subsidies to consumers who purchase electric cars and hybrid cars to stimulate car consumption. The German government reached an agreement with the European Commission to provide 9 billion euros of assistance to Lufthansa through the Economic Stability Fund.

The challenge of economic recovery is not small

European media generally believe that, driven by favorable economic policies such as large-scale economic stimulus, some positive signs have emerged in the European economic recovery, but the overall recovery momentum is still weak. At present, the situation of epidemic prevention and control in some European countries is still grim. Countries need to find a balance between epidemic prevention and economic recovery, and the tasks facing them are still very arduous.

The European Central Bank recently predicted that the euro zone economy will shrink by 8.7% in 2020 and will grow by 5.2% and 3.3% in the next two years. European Central Bank President Lagarde said at the European Parliament's online hearing on the 8th that the euro zone economy is experiencing an unprecedented contraction. As the lifting of the ban is slowly progressing, economic activities are showing signs of recovery, but economic improvement is not yet obvious. The Eurozone economy may rebound in the second half of the year.

Eurovision News commented that the "Restoration Fund" proposed by the European Commission provides new opportunities for the EU's economic transformation and helps to further promote the development of the EU's green economy. However, if the EU is to achieve its green development goals, it must coordinate the efforts of EU member states, businesses and society to achieve more inclusive and fair development. The European News Network article believes that the EU cannot simply provide funds to the market, but should use this as an opportunity to promote the EU's economic transformation, especially to promote the development of the digital economy.

Neil Shee, chief economist at Capital Investment, also believes that the European economy has begun to bottom out, but the economic recovery momentum is very weak, requiring long-term and continuous monetary and fiscal policy intervention.

A research report released by the Bruegel Institute, a well-known think tank in Europe, pointed out that due to the impact of the epidemic, European economies have experienced economic downturns, reduced taxes, increased unemployment, increased social welfare expenditures, and high deficits. Relying solely on strong fiscal and monetary stimulus policies may give The fiscal balance poses new challenges. The EU should further focus on improving competitiveness, social equity and inclusiveness, and introduce a comprehensive package of measures at the EU level.