A recovery plan for Europe

A Global issue

The human and economic cost of the CoViD-19 pandemic

2020 will be the year to remember the lockdown of many European countries, because of CoViD-19.

The human and economic cost of epidemics is unsustainable. Effective research and coordinated action stop outbreaks spiralling into global health emergencies.

This pandemic of the coronavirus not only triggers just one part of the world. As the virus continues its rapid global spread, the catastrophic potential becomes ever more obvious. Health systems, economies, the fabric of society, all are at risk. Addressing a global crisis of this magnitude requires tough decisions by leaders of every country affected.

This time is used by a certain president of a so-called civilised and developed country, to create hate against other nations and people. Ignoring the killing power of that virus Mr. Trump brought millions of people in danger and gave the world the opportunity to see how weak the American system really is.

Reason to unite

As countries step-up to the challenge, they must not aim to find a guilty person or country, but should try to unite, rather than retreat behind borders. Global powers, like the G7 and G20, need to be the force that brings and underpins a unified global response. Their commitment is critical to ensure the stability of the global economy and to support a coordinated research effort to develop treatments for CoViD-19 – but their words must be swiftly matched by action.

Now, we also are in a period that all countries of the European Union should unite and show why the European Union is so important for everybody living here in Europe.

Leaders must do more to ensure that all countries have the support they need to effectively manage the pandemic. Alongside this, it is becoming increasingly clear that we urgently need more investment in vaccines, treatments and diagnostics if we are to have the best chance of saving lives and bringing this pandemic to an end.

Support for global economy

In recent weeks there have been unprecedented announcements aimed at supporting the global economy. The World Bank and the International Monetary Fund have moved rapidly to commit up to $12 billion and $50 billion respectively to address the economic and fiscal impact of CoViD-19.

Big as these sums sound, critical gaps remain. This funding will help governments take national action and bolster economies, but it does not cover everything that is needed to tackle this virus and protect the world’s health. In the short term, at least $8 billion is needed to fund research, development and supply of treatments for all, and support for public health measures in countries with the weakest health systems.

Scientists looking for developing a vaccine

The big problem with this pandemic is that at the moment, nowhere in the world, even not Mr. Trump (though he wants others to believe differently) has no solution how to tackle this killer disease. None has treatments for this virus.
Scientists worldwide are working at unprecedented speed to develop these, alongside initiatives like the Coalition for Epidemic Preparedness and Innovations (CEPI) and the COVID-19 Therapeutics Accelerator. However, significantly more investment is needed if we are to develop these quickly and produce enough for everyone.

CEPI is coordinating the development of vaccines and aims to make hundreds of millions of doses available within 12-18 months, through a globally fair allocation system. It will cost at least $3 billion to make this happen.

The Therapeutics Accelerator aims to speed up the development, manufacturing and distribution of treatments for CoViD-19, particularly in low- and middle-income countries. To produce 100 million courses of treatment by the end of 2020 will cost around $2.25 billion.

Both these initiatives are providing much needed coordination to the efforts of scientists around the world and are committed to ensuring equitable access to treatments – something that is crucial when solidarity between nations is little in evidence.

Recognising and tackling the costs of the virus

Now is not the time to make cautious investments: now is the time for courageous decisions. It is estimated that CoViD-19 could cost the global economy at least $1 trillion in lost output, or 1.3% of global GDP. Health systems globally will be stretched to the limit. The world hasn’t seen a public health threat like this since the 1918 Spanish flu pandemic, which killed tens of millions. G7 and G20 leaders need to act faster and with a significantly greater, and more targeted resource.

Change the course of this pandemic

We can still change the course of this pandemic with decisive and swift action. To do this, countries must engage in real and meaningful coordination. This virus transcends all borders, our response must also.

One very good step is that researchers all over the world are willing to share interim and final research data relating to the outbreak, together with protocols and standards used to collect the data, as rapidly and widely as possible – including with public health and research communities and the WHO. Shame that just now when so much money and help is needed the American government withdrew from this worldwide organisation.

Priority actions

First on 7 April 2020, research and innovation Ministers from all 27 EU Member States supported 10 priority actions of the ERAvsCorona Action Plan. Building on the overall objectives and the tools of the European Research Area (ERA), the Action Plan covers short-term actions based on close coordination, cooperation, data sharing and joint funding efforts between the Commission and the Member States. It is centred around the key principles of the European Research Area, which will now be used to achieve towards their maximum effect to help researchers and EU Member States succeed in their fight against the coronavirus pandemic.

Coordinated funding

In addition to the European CoViD-19 Data Platform launched that day, the other actions focus on coordinating of funding, extending large EU-wide clinical trials, increasing support to innovative companies and supporting a pan-European Hackathon in the end of April to mobilise European innovators and the civil society. The joint plan listing priority actions will be regularly updated in a co-creative manner between the Commission services and national governments in the coming months. 

Building on the considerable progress that has already been made in the European Parliament and the Council, the Commission now proposes to deploy a reinforced EU budget to help repair the immediate economic and social damage brought by the coronavirus pandemic, kickstart the recovery and prepare for a better future for the next generation.

Trap laid out

We know that there exist the danger of many companies trying to misuse this health crisis to reorganise their businesses, and to fire several people. It is to the leaders of each country to carefully examine the facts and how companies treat their employees in this particular situation.

A recovery plan to help Europe moving forward again

Lovely to hear that at last the EU took the right decision to provide money to help the many countries affected by the disease.

The EU Budget provided to power the recovery plan is a gift in solidarity of all states from 27 May 2020 fromthe European Commission SURE / ESM Pandemic Crisis Support / EIB Guarantee Fund for Workers and Businesses mounting to €540 billion; Next Generation EU Temporary reinforcement €750 billion and a Multiannual Financial Framework of €1 100 billion.

Mobilisation plan

To mobilise the necessary investments, the Commission is putting forward a two-fold response:

• Next Generation EU to boost the EU budget with new financing raised on the financial markets for 2021-2024

• Reinforced long-term budget of the European Union for 2021-2027 Next Generation EU of €750 billion as well as targeted reinforcements to the long-term EU budget for 2021-2027 will bring the total financial firepower of the EU budget to €1.85 trillion.

Together with the three important safety nets for workers, businesses and sovereigns endorsed by the European Council on 23 April 2020 and amounting to a package worth €540 billion, these exceptional measures taken at the EU level would reach more €1.290 trillion.

To Soften lockdown impact

We may be sure the impact of the lockdown on our economy shall leave her traces for several years. Therefore EU response to the coronavirus crisis will be spread between now and 2027, concentrated in the first crucial years of recovery. To ensure an effective response, which reaches out to everybody in the EU and to our global partners, the Commission is mobilising a variety of instruments.

Next Generation EU will be rolled out under three pillars:

1. Supporting Member States to recover
2. Kick-starting the economy and helping private investment
3. Learning the lessons from the crisis

Demanding public investment

Public investment has a vital role to play in a balanced and sustainable recovery. The bulk of the funding from Next Generation EU (more than 80%) will therefore be used to support public investment and key structural reforms in the Member States, concentrated where the crisis impact and resilience needs are greatest. The Recovery and Resilience Facility together with cohesion policy and the Just Transition Mechanism will be instrumental in achieving these important goals. Their delivery will be embedded in the European Semester. In addition, the reinforced European Agricultural Fund for Rural Development will support rural areas in making the structural changes necessary in line with the European Green Deal.

Urgent action is needed to kick-start the economy and create the conditions for a recovery led by private investment in key sectors and technologies. This investment is particularly crucial to the success of Europe’s green and digital transitions.
The Commission estimates that investment needs amount to at least €1.5 trillion in 2020-2021. Investment in key sectors and technologies, from 5G to artificial intelligence and from clean hydrogen to offshore renewable energy, holds the key to Europe’s future.

Healthy companies are a prerequisite for success in this investment drive, yet hundreds of thousands of companies are likely to come under severe financing pressure by the end of the year. The Commission is therefore proposing a new Solvency Support Instrument to provide urgent equity support to sound companies put at risk by the crisis. This will help them weather the storm and support their green and digital transformation. This instrument should become operational still this year.

The Commission is also proposing to strengthen Invest EU, Europe’s flagship investment programme, to mobilise investment across the Union in areas such as sustainable infrastructure and digitisation. As part of this, the Commission proposes to create a new Strategic Investment Facility to invest in key value chains crucial for Europe’s future resilience and strategic autonomy in the context of the green and digital transitions.

European cooperation and expansion of RescEU

The crisis has both underlined the value of European cooperation and demonstrated vividly that the Union must urgently build up its capacity to respond to crises and build resilience to future shocks. The Commission is proposing a new Health Programme to strengthen health security and prepare for future health crises. RescEU, the Union’s Civil Protection Mechanism, will be expanded and reinforced to equip the Union to prepare for and respond to future crises. Horizon Europe will be reinforced to fund vital research in health, resilience and the green and digital transitions. The EU will support its global partners through an additional €16.5 billion for external action, including humanitarian aid. Other EU programmes will be strengthened to align the future financial framework fully with recovery needs. These include the Common Agricultural Policy and the European Maritime and Fisheries Fund, to strengthen the resilience of the agri-food and fisheries sectors and to provide the necessary scope for crisis management.

Flexibility

Beyond the individual programmes, the crisis has underlined how important it is that the Union is able to react fast and flexibly to put in place a coordinated European response. This in turn requires a more flexible EU budget. Therefore, the Commission proposes to reinforce the flexibility of the EU budget and emergency tools for the period 2021-2027

The Union shall provide

• a Solidarity and emergency aid reserve, enabling swift reinforcements via budgetary transfers to EU instruments where needs arise
• a Solidarity fund to support Member States in the response and immediate recovery following natural disasters such as floods, forest fires, earthquakes, storms and droughts; and
• a European Globalisation Adjustment Fund to provide support for the reintegration in the labour market of persons losing their jobs as a result of unexpected major restructuring events such as a financial or economic crisis

Together, these instruments would provide for a maximum of €21 billion additional emergency financing over the 2021-2027 period compared to the Commission’s proposals of 2 May 2018.

Financing the policy response

The bulk of the proposed recovery measures will be powered by a Next Generation EU with financial firepower of €750 billion. The instrument will be exceptional and temporary. The financing will be made possible by the Own Resources Decision, which will allow the Commission to exceptionally borrow up to €750 billion on behalf of the Union, through the issuance of bonds, for measures over the period 2021-2024.

The Commission will then direct the funds in pursuit of EU priorities to the specific and new financing needs that have been revealed by the crisis through grants and loans.
In this way, the Union will provide a forceful support to its Member States without putting additional pressure on their national budgets at the time when they are most strained.

To facilitate the repayment of the market finance raised and further help reduce the pressure on national budgets, the Commission will propose additional new own resources on top of those proposed in 2018 at a later stage of the financial period.

No time to lose

It took a long time before the leaders of the European Union came out with a sound strategic recovery plan.

The consequences of the corona crisis will be felt for a long time and the European Community will have to join forces in order to get out of this deep valley again. It is good to see that now the EU has taken the essential steps to help Member States and businesses addressing the immediate challenges brought by the Coronavirus crisis as well as to ensure durable growth and convergence in the longer term.

The European Commission invites the European Council and the co-legislators to examine these proposals rapidly with a view to reaching a political agreement at the level of the European Council by July. The Commission will then work closely with the European Parliament and the Council to finalise an agreement on the future framework and the accompanying sectoral programmes. Completing this work in the early autumn would mean that the new long-term budget could be up and running, and driving Europe’s recovery on 1 January 2021.