The evolution of European economic institutions during the COVID‐19 crisis

Abstract

Only a decade after the eurozone sovereign debt crisis that almost led to the break-up of the monetary union, the euro area is facing another threat, with the COVID-19 pandemic leading to the most severe contraction of output ever recorded. 1 There is now much debate about the nature and pace of the recovery that may ensue. Household consumption could continue to be subdued following the introduction of social distancing measures, higher unemployment and precautionary saving. Meanwhile, high uncertainty about possible setbacks on the health front, and the large increase in corporate debt during the lockdowns, could weigh heavily on private investment.

Responding to COVID‐19: The Case of Spain

“…7 Unsurprisingly, the Spanish government has been very active at the European level in seeking help, by urging EU leaders to take on the mutualization of debt and the issuing of coronabonds. In the end, in addition to the three safety nets of €540 billion already put in place by the EU to support workers, businesses, and governments, on July 21st, EU leaders agreed on an overall budget of €1.824 trillion for 2021-2027 to help the EU rebuild after the COVID-19 pandemic that includes €390 billion in grants and €360 billion in loans (Camous & Claeys, 2020).…”

Public policy responses to COVID‐19 in Europe

“…The capacity of states to manage and oversee lockdowns, including by meeting the surge in demand for intensive care beds and personal protective equipment (PPE) in hospitals and care settings, as well as the enormous social protection costs associated with supporting citizens experiencing a sudden loss of income, was exposed during the initial months of the pandemic (Hassenteufel, 2020). This gave rise to debates about the prospect of fiscal burden-sharing between member states in the EU, as we shall see (Camous & Claeys, 2020;van Overbeke & Stadig, 2020). The early stages of the pandemic also tested the resilience of state institutions and their ability to function without permanent or stable governments following inconclusive elections, as was the case in both Belgium and Ireland.…”

“…The onset of COVID-19 highlighted many of the fragilities and economic divergences within the Eurozone. Camous and Claeys (2020) review the measures taken by the European institutions in the initial stages of the pandemic and discuss whether these were appropriate to mitigate the uneven consequences of the economic crises as they developed. The article first reviews how established institutions developed emergency responses.…”

Europe’s essential workers: Migration and pandemic politics in Central and Eastern Europe during COVID‐19

“…Instead of opting for cooperation and policy harmonization, governments are once again trying to address the current global health emergency through patchwork policies, unilateral measures, and special bilateral arrangements. It remains to be seen whether the European Commission will manage to turn this crisis into a window of opportunity for deepening and widening European integration (see Camous & Claeys, 2020).…”