Eurozone central bankers were optimistic about the possibilities for economic recovery from the pandemic-induced depression on Friday, but warned that Europe will have to work hard to stop long-term economic harm and avoid falling behind China and the United States.
“Things are looking very good in Europe … investment is rising and the growth forecasts are really well oriented,” French Finance Minister Bruno le Maire said on entering the ministerial meeting. “Everywhere in Europe growth is back.”
According to European Commission projections, the 27-nation EU will achieve pre-pandemic growth levels in the mid of 2022, with some countries, such as Germany and France, already there by the end of this year and others, such as Italy or Spain, not until the end of 2022.
However, estimates predict that China and the United States will recover faster, and the eurozone will need to move rapidly to enhance its economic potential if it is to remain among the top performers, according to France’s finance minister.
“Do we want to play in the first league, or do we want to lag behind China and U.S.?” le Maire said.
“We need more activity, more investment in new technologies. We have to improve the growth potential of Europe. Coming back to normal is not the right ambition. This is from a historic point of view the key decision that we will have to take over the next months,” he said.
Over the next months, the European Commission will examine EU states’ reform and investment proposals targeted at making their economies more green and digital.
The EU’s 750 billion euro ($917 billion) recovery fund will be used to pay out low-interest loans and grants, with the first disbursements scheduled by the end of July.
The historic unified borrowing exercise will assist growth, according to German Finance Minister Olaf Scholz, who praised it as a historic undertaking that will strengthen the EU and move it closer to a fiscal unity that markets have long sought.
“Even when the crisis is over, we will see that we have made a big step towards a fiscal union, which will make us stronger to fight crises,” he said on entering the talks. “Europe will come out of this crisis better than it was before,” he said.
Besides the positivity, the ministers expressed worry that the epidemic, which put the EU into its deepest-ever recession last year, may harm future growth prospects if it is not tackled.
“We are very conscious of challenges that many Europeans face at the moment, very conscious of the scars and the risks of the damage, and we will do our best to overcome those,” the chairman of the ministers Paschal Donohoe said.