EU slump of ‘historic proportions’

The European Union has predicted a recession of “historic proportions” this year due to the impact of coronavirus, with a drop in output of more than 7%.

The 27-nation EU economy is predicted to contract 7.5% this year, before growing by about 6% in 2021, according to the union’s first official forecast of the damage the pandemic is inflicting.

The group of 19 nations using the euro as their currency will see a record decline of 7.75% this year, and grow by 6.25% in 2021, the European Commission said in its spring economic forecast.

“Europe is experiencing an economic shock without precedent since the Great Depression,” said EU Economy Commissioner Paolo Gentiloni.

More than 1.1 million people have contracted the virus across Europe. In excess of 137,000 have died, according to the European Centre for Disease Prevention and Control.

With the spread slowing in most European countries, people are cautiously venturing out from confinement and gradually returning to work, but strict health measures remain in place amid concern of a second wave of outbreaks, and any return to something like normal is at least months away.

The pandemic has hurt consumer spending, industrial output, investment, trade, capital flows and supply chains. It has also hit jobs. The unemployment rate across the 27-nation EU is forecast to rise from 6.7% in 2019 to 9% this year, then fall to around 8% in 2021, the commission said.