EU predicts a ‘recession 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 by 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.
Yesterday’s warning came as, across the Atlantic, the Trump administration looked to shift its focus on rebooting the US economy as huge question marks remained over the president’s handling of the crisis.
The group of 19 EU 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,” EU Economy Commissioner Paolo Gentiloni said.
More than 1.1 million people have contracted the virus across Europe and over 137,000 have died, according to the European Centre for Disease Prevention and Control.
Unclear outbreak data, low testing rates and the strain on healthcare systems mean the true scale of the pandemic is much greater.
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 life 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% in 2020 but then fall to around 8% in 2021, the commission said.
Mr Gentiloni said that the depth of the recession and the strength of recovery will be uneven across the world’s biggest trading bloc.
Much will depend, he said, on “the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country’s financial resources”.
Meanwhile, US president Donald Trump was seen to switch focus on kick-starting the economy from battling an “invisible enemy”, as his administration aimed to wind down its coronavirus taskforce in the coming month.
The taskforce’s members have become fixtures on television sets across the nation, with Americans hungry for information and marooned at home, but the White House has begun discussions about winding down the group, which has been meeting less frequently, vice president Mike Pence said.
“I think we’re having conversations about that and about what the proper time is for the taskforce to complete its work and for the ongoing efforts to take place on an agency-by-agency level,” Mr Pence said, adding that the group could wind down by early June.
“We’re now looking at a little bit of a different form, and that form is safety and opening,” Donald Trump said on a visit to Arizona, “and we’ll have a different group, probably, set up for that.”
Asked about his statements in February playing down the threat of the virus, he told ABC in an interview that medical experts had also underestimated the risk and added: “I want to be optimistic. I don’t want to be Mr Doom and Gloom.
“It’s a very bad subject. I’m not looking to tell the American people, when nobody really knows what is happening yet, ‘Oh, this is going to be so tragic.’”
Mr Trump is seeking to move his focus away from the virus’ spread and towards more familiar – and, aides hope, politically safer – ground: talking up the economy.
As more states have begun to ease closure orders, despite warnings that could lead to spikes in new cases, Mr Trump has been trying to highlight his administration’s work in helping businesses and employees rebound.
Speaking on Tuesday, he said: “The people of our country should think of themselves as warriors. We have to open.
“I’m not saying anything is perfect, and yes, will some people be affected? Yes. Will some people be affected badly? Yes. But we have to get our country open and we have to get it open soon.”