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Reconstructing the EU After COVID-19


This week, EU leaders announced a ground-breaking and highly anticipated plan, the ‘Next Generation EU’, to jointly borrow €750 billion to respond to the coronavirus pandemic. The EU’s new recovery plan, which will be composed of grants and loans attached to the new Multiannual Financial Framework, is the culmination of what many consider a painfully slow and uncoordinated European response to the COVID-19 crisis and the far-reaching effects it has had on the European economy. While a crisis of this magnitude could threaten the EU’s very existence, deepening divides and sewing the seeds of anti-European sentiment, it may conversely also be an opportunity for the EU to address some of the fundamental flaws that exist in the euro area architecture. The pandemic response is a chance for Europe to reboot by focusing on a number of mechanisms at hand, including state aid, taxation and labour reallocation, among ot hers. The EU should not lose sight of broader societal goals such as climate neutrality and digitisation but rather prioritise them. Ultimately, if handled correctly, the coronavirus pandemic has the potential to bring the EU together like no other event since its foundation.

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The Covid-19 Response

The Economics of the Coronavirus Crisis

Intereconomics will be publishing all coronavirus crisis related articles online first in order to provide our readers up-to-date information as this unprecedented situation continues to unfold.

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Editorial

Next Generation EU: A Large Common Response to the COVID-19 Crisis

In their Editorial, Cinzia Alcidi and Daniel Gros examine the newly agreed upon recovery plan for the EU and ask whether the COVID-19 crisis has worked as a trigger for the creation of a new instrument that could be of strategic importance to the long-term stability of the euro area and more generally of the EU.

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Forum

SURE: Protecting Jobs From the Pandemic

Once it was clear that economic and social activities had to cease in order to slow the spread of the coronavirus epidemic, the risk of rapidly rising unemployment became apparent. In response, the European Commission proposed the creation of a European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE). This bold and innovative move will make financial support available in the form of loans to hard hit member states through short-time work schemes or similar measures. "While structural interventions like SURE can be important, they are not substitutes for the appropriate macroeconomic policies that have to be in place to ensure the fastest possible recovery", writes László Andor.

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Letter from America

Early Care and Education: Necessary Infrastructure for Economic Recovery

The coronavirus pandemic has brought into bold relief the essential nature of care work for families and the economy, writes Eileen Applebaum in this issue's Letter from America. Essential care jobs in the U.S. are done by predominantly female and disproportionately Black, Latinx and immigrant workers. The coronavirus pandemic has exposed the racial, ethnic and class disparities in access to health care and other services that urgently need to be addressed. Appelbaum suggests that investing in care infrustructure is both job creating and job enabling and yields a significant positive rate of return.

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