Disagreements on the launch of aid plans are still difficult to bridge
. Can the "recovery fund" recover the European economy? (Global hot spots)
According to Eurolink News Agency, on August 1, local time, the European Union approved the three national aid plans submitted by Italy, involving a total of 6 billion euros. The aid plan is part of the EU's "Recovery Fund" framework, aimed at assisting small and medium-sized enterprises in Italy severely affected by the new crown pneumonia epidemic. This is the first time the EU has implemented an aid plan since the EU approved the 750 billion euro "recovery fund" on July 21.
Experts pointed out that the new crown pneumonia epidemic has severely impacted the European economy and aggravated the imbalance in economic development among the EU member states. Through a number of economic stimulus plans, EU institutions have not only sent positive signals to the market, but also demonstrated their determination to lead European integration.
Quick landing shows determination
“The EU’s approval of Italy’s national aid plan so quickly has obvious positive significance.” Cui Hongjian, director of the Institute of European Studies of the China Institute of International Studies, said to this newspaper that the first is stabilization. The “recovery fund” was quickly transferred from the paper negotiation level. At the specific implementation level, it will not only give the EU member states in need a "reassurance", but also send a positive signal to the market; second, it will serve as an example. Italy will give other EU member states the application procedure and the direction of application funds. Follow up the application to provide reference; the third is to express its determination. The EU, through cooperation with Italy and other applicant countries, shows its determination to revive the European economy and lead European integration.
The "Recovery Fund" is the largest fiscal expenditure plan in the history of the EU, with a total of 750 billion euros, of which 390 billion euros are free grants and 360 billion euros are low-interest loans. Specifically, the "Recovery Fund" consists of 7 independent programs, including 672.5 billion euros in recovery and resilience tools (including 360 billion euros in loans and 312.5 billion euros in grants), 47.5 billion euros in the EU response plan, and 5 billion euros. European Horizon Project, 5.6 billion Euro Investment in Europe Project, 7.5 billion Euro Rural Development Project, 10 billion Euro Transition Fund, 1.9 billion Euro European Rescue Plan. Italy has applied for three of the aid programs.
In addition, according to the agreement reached at the EU summit on July 21, the "Recovery Fund" is borrowed from the financial market by the EU as a whole, and is linked to the 2021-2027 EU multi-year budget framework with an amount of 1.074 trillion euros. This means that in the next seven years, the EU’s total fiscal expenditure will exceed 1.82 trillion euros.
"Multiple actions can be achieved in one fell swoop." Cui Hongjian believes that this move first demonstrates the EU's vision of combining short-term crisis response with mid- and long-term economic structural transformation and upgrading; second, it reflects the EU's determination to lead the European fiscal integration for future response. Similar public health crises and new debt crises increase the means and tools; the third is to stabilize the value of the euro and the financial market, ease the impact of the epidemic and Brexit on the EU economy, and rebuild market confidence. The EU's economic assistance plan combines multiple considerations such as fiscal stimulus, crisis relief, and industrial layout. If it is successfully implemented, it will greatly help stabilize the world economy.
As the epidemic eased and a series of economic stimulus measures were implemented, the European economy showed signs of recovery. On August 3, local time, the latest data released by the market research agency IHS Markit showed that the Eurozone Manufacturing Purchasing Managers Index (PMI) rebounded from 47.4 in June to 51.8 in July, which was better than market expectations of 51.1 in 2019. For the first time since the beginning of the year, it has surpassed the 50th line. IHS Markit chief economist Williamson said that this shows that the European economy has started well in the third quarter.
Join forces to overcome difficulties
The new crown pneumonia epidemic has an unprecedented impact on the global economy, and Europe has fallen into an unprecedented economic crisis. Uniting for self-reliance is the inevitable choice for European countries to deal with the crisis.
According to a report by the French "Parisian" on August 2nd, with the outbreak of the epidemic, bad news comes out every day in Europe. Consumption, investment and exports have all fallen, all growth drivers have ceased, and the number of unemployed has increased sharply.
According to the report, the epidemic has exacerbated inequality between northern and southern European countries. Italy and Spain in southern Europe are the main victims of the epidemic. Prior to this, the two countries have experienced the 2008 financial crisis and the 2012 sovereign debt crisis one after another, and have further fallen into recession during the epidemic, and there is not enough fiscal room to deal with the crisis. France is a big country in the aviation and tourism industry, and it is particularly affected by the epidemic. The situation is similar in Spain, where tourism is the pillar industry. The damage suffered by northern Europe is minor, but it cannot be underestimated. The Federal Statistical Office of Germany announced that the gross domestic product (GDP) in the second quarter of this year fell by 10.1% year-on-year, becoming "the largest decline since Germany began to count quarterly GDP in 1970." In the Nordic countries, the number of unemployed people also increased rapidly within three months of the epidemic.
Facing the impact of the epidemic, EU member states actively rescue themselves. Germany passed an economic stimulus plan totaling 130 billion euros in June, and has previously introduced a 750 billion euro economic relief package; France has announced 45 billion euros in financial assistance to companies and employees affected by the epidemic, and loans to corporate banks A national guarantee of 300 billion euros; after Italy introduced an emergency rescue plan of 80 billion euros, it has successively released about 750 billion euros of liquidity to provide loan guarantees to companies in difficulties; Spain, Portugal, the Netherlands, Croatia, Sweden, Norway, etc. EU member states have also introduced economic rescue and stimulus plans of varying scales.
But these are far from enough. The ongoing epidemic has cast a lingering haze on the European economic recovery.
According to real-time data from Johns Hopkins University in the United States, among the major EU countries at the end of July, Spain, France, Italy, and Germany saw a week-on-week increase of more than 15% in new confirmed cases. Among them, the increase in new cases in Spain was even greater. As high as 32.3%. According to data released by Eurostat on July 31, due to the impact of the new crown pneumonia epidemic, in the second quarter of this year, the euro zone's GDP growth rate shrank by 15% year-on-year and 12.1% month-on-month.
The widening differences between Europe and the United States have also prompted the EU to hold together for warmth. Cui Hongjian said that the travel ban, competition for medical supplies, and competition measures for vaccine research and development adopted by the United States in the early stages of the outbreak have increased the rift between Europe and the United States. In addition, the outcome of the US general election is still unclear, and the European Union is holding a wait-and-see attitude towards improving European-American relations. The structural differences between Europe and the United States have made some major EU countries realize that the United States will not make inclusive concessions to the EU in order to maintain its leading position in the world. In the face of the economic crisis, EU member states must take concerted action.
Slow recovery from multiple risks
Eurovision News commented that the "Recovery Fund" provides new opportunities for the EU's economic transformation and will help further promote the development of the EU's green economy. However, in order for the EU to achieve its green development goals, it must coordinate the forces of EU member states, business and society to achieve more inclusive and fair development.
Some analysts pointed out that a series of economic assistance programs launched by the European Union faced difficult contradictions in the specific implementation process, which added uncertainty to the European economic recovery.
"The use of aid funds faces problems in terms of efficiency, moral hazard, and political pressure." Cui Hongjian believes that first, the rich European Congress represented by the "Five Thrift Countries" such as the Netherlands continues to exert moral pressure on recipient countries. If the recipient country fails to put the applied grants or loans in the right direction, or if there are problems in the use, it will become a reason for criticism from rich European countries. Second, the political conflicts between Western European countries and Central and Eastern European countries have further intensified. Western European countries hope that the use of grants and loans can be linked to the political performance and democratic reforms of Central and Eastern European countries to produce actual political effects. Therefore, the supervision of the application and use of funds from Central and Eastern European countries will be more stringent. Central and Eastern European countries will not willingly accept the mercy of the European Union and Western European countries.
At present, the European economic recovery faces multiple risks, and the prospects for recovery are not optimistic. Recently, the European Commission issued a new forecast report, adjusting the EU’s economic growth rate of decline in 2020 from the previously predicted “7.4% drop” to “8.3% drop”. This indicates that the negative impact of the new crown pneumonia epidemic on the EU economy is more serious than before, and the economic recovery of the major EU countries is not satisfactory. The report pointed out that Italy, Spain, and France are the "three countries most affected by the new crown pneumonia epidemic" among the major EU countries. The economic decline of these three countries is expected to be 11.2%, 10.9% and 10.6% respectively in 2020.
The British "Financial Times" believes that the EU economy is not only facing the direct impact of the epidemic, but also factors such as Brexit and the trend of conservative global trade have also had a greater impact on the EU economy. Even if the economy recovers in the second half of the year, it will be a slow and long-term process.
Faced with multiple risks such as a rebound of the epidemic, economic recession and internal differentiation, how can Europe maintain its global strategic competitiveness? Cui Hongjian believes that Europe is a concentrated area of moderately developed countries. In an international structure dominated by competition among major powers, Europe can only find a way out through unity and self-reliance. First, we must establish and maintain confidence in European integration, strengthen internal unity, and develop strategic autonomy; second, we must flexibly adjust relations with the United States and maintain a clear understanding of external threats and factors that undermine internal unity. We should not simply proceed from the so-called ideology. Third, we must continue to improve soft power, adhere to the multilateralism and dialogue and consultation that it has always advocated, and actively promote the dialogue of global civilizations, rather than retreating to the old political framework of realism.
Jia Pingfan