The EU Economic System under the Pressure of a Pandemic: Opportunities and Limits of Transformation
https://doi.org/10.23932/2542-0240-2020-13-4-7
Abstract
The EU economy is experiencing the third major shock over the last 12 years. First it was the global financial crisis, then the European sovereign debt crisis, and now the COVID-19 pandemic. The economic system of the European Union, that includes national economies and policies and the scope of EU economic policies, takes a severe blow caused by an external factor - the worldwide spread of an extremely contagious virus that threatens people’s lives and health.
The article aims at identifying the transformational resource of the EU supranational economic governance in response to a new severe shock.
Therefore, two tasks are set. Within the first one, this paper presents an overview of the European economic landscape on the eve of the pandemic, taking into account the long-term trends that emerged after the Great Recession and the euro area debt crisis. Four key features of the “new normal” are highlighted: slow economic growth, fragile labor markets, high levels of government debt and subdued inflation. We study the economic effects of pandemic, or rather, the confinement measures introduced by national governments, on these particular areas.
Within the second task this paper evaluates the effectiveness of the key economic responses the EU policy-makers and institutions are taking to counter the impact of the COVID-19 pandemic and to strengthen the resilience of the EU economic system. This approach is translated into the reforms of the EU economic governance under way now with a view of achieving a genuine European and Monetary Union. The paper concludes that with the creation of the single market and the euro the EU has taken almost full advantage of the negative integration. Аnd now to promote growth and employment it has to untap the potential of the positive integration, which benefits are
likely to spread unevenly across regions and social groups.
The article aims at identifying the transformational resource of the EU supranational economic governance in response to a new severe shock.
Therefore, two tasks are set. Within the first one, this paper presents an overview of the European economic landscape on the eve of the pandemic, taking into account the long-term trends that emerged after the Great Recession and the euro area debt crisis. Four key features of the “new normal” are highlighted: slow economic growth, fragile labor markets, high levels of government debt and subdued inflation. We study the economic effects of pandemic, or rather, the confinement measures introduced by national governments, on these particular areas.
Within the second task this paper evaluates the effectiveness of the key economic responses the EU policy-makers and institutions are taking to counter the impact of the COVID-19 pandemic and to strengthen the resilience of the EU economic system. This approach is translated into the reforms of the EU economic governance under way now with a view of achieving a genuine European and Monetary Union. The paper concludes that with the creation of the single market and the euro the EU has taken almost full advantage of the negative integration. Аnd now to promote growth and employment it has to untap the potential of the positive integration, which benefits are
likely to spread unevenly across regions and social groups.
Keywords
European Union,
euro area,
COVID-19 pandemic,
economic integration,
EU economic governance,
EU public finances,
economic growth,
unemployment
Supporting agencies: The article was published in the framework of the project "post-Crisis world order: challenges and technologies, competition and cooperation" under grant no 2020-1902-01-372 of the Ministry of science and higher education for conducting major scientific projects in priority areas of scientific and technological development.
About the Author
O. V. Butorina
Institute of Europe of the Russian Academy of Sciences
Russian Federation
Russian Federation
Corresponding Member RAS, DSc in Economics, Deputy Director
125009, Mokhovaya St., 11–3, Moscow, Russian Federation
References
1. Afontsev S.A. (2019) New Trends in Global Economy. World Economy and International Relations, vol. 63, no 5, pp. 36–46 (in Russian). DOI: 10.20542/0131-2227-2019-63-5-36-46
2. Bekker S. (2020) Hardening and Softening of Country-specific Recommendations in the European Semester. West European Politics, April 7, 2020. DOI: 10.1080/01402382.2020.1739407
3. Bublitz E. (2018) The European Single Market at 25. Intereconomics. Review of European Economic Policy, no 6, pp. 337–342. DOI: 10.1007/s10272-018-0779-7
4. Butorina O. (2020) An Economic History of the Euro, Moscow: Ves’ Mir (in Russian).
5. Butorina O., Tsibulina A. (2018) Inflation in the Euro Area: Challenges of the New Normal. Contemporary Europe, no 4, pp. 90–100 (in Russian). DOI: 10.15211/soveurope4201890100
6. Commission of the European Communities (1985). Completing the Internal Market. White Paper from the Commission to the European Council (Milan, 28–29 June 1985), Brussels.
7. Commission of the European Communities (1988). Europe 1992. The Overall Challenge. SEC, no 524 final. Brussels, 13 April. Available at: http://aei.pitt.edu/3813/1/3813.pdf, accessed 25.08.2020.
8. Commission of the European Communities (1990). One Market, One Money, An Evaluation of Potential Benefits and Costs of Forming an Economic and Monetary Union. European Economy. No. 44.
9. European Central Bank (2020). Economic Bulletin. No. 4.
10. European Commission (2015). Completing Europe’s Economic and Monetary Union. Report by Jean-Claude Juncker in Close Cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz.
11. European Commission (1) (2020). European Economic Forecast Spring 2020. DOI: 10.2765/788367
12. European Commission (2) (2020). Temporary Framework for State Aid Measures to Support the Economy in the Current COVID-19 Outbreak. Communication from the Commission, Brussels.
13. European Commission (3) (2020). Communication from the Commission to the Council on the Activation of the General Escape Clause of the Stability and Growth Pact, Brussels.
14. European Commission (4) (2020). The EU Budget Powering. The Recovery Plan for Europe. DOI: 10.2761/712137
15. European Commission (5) (2020). 2020 European Semester: Country-specific Recommendations, Brussels.
16. European Commission (6) (2020). Commission Work Programme 2020. A Union That Strives for More, Brussels.
17. European Commission (7) (2020). Recommendation for a Council Recommendation on the 2020 National Reform Programme of Spain and Delivering a Council Opinion on the 2020 Stability Programme of Spain, Brussels.
18. European Commission (8) (2020). Recommendation for a Council Recommendation on the 2020 National Reform Programme of Italy and Delivering a Council Opinion on the 2020 Stability Programme of Italy, Brussels.
19. Grigoryev L.M., Pavlyushina V.A., Muzychenko E.E. (2020) The Fall into 2020 Recession. Voprosy ekonomiki, no 5, pp. 5–24 (in Russian). DOI: 10.32609/0042-8736-2020-5-5-24
20. Henrekson M., Torstensson J., Torstensson R. (1997) Growth Effects of European Integration. European Economic Review, vol. 41, no 8, pp. 1537–1557. DOI: 10.1016/S0014-2921(97)00063-9
21. Hernández de Cos P. (2020) Pablo Hernández de Cos Appearance before the Parliamentary Economic Affairs and Digital Transformation Committee. BIS, May 18, 2020. Available at: https://www.bis.org/review/r200522d.htm, accessed 25.08.2020.
22. Jenkins R. (1977) Europe’s Present Challenge and Future Opportunity. CVCE, October 27, 1977. Available at: http://www.cvce.eu/content/publication/2010/11/15/98bef841-9d8a-4f84-b3a8-719abb63fd62/publishable_en.pdf, accessed 25.08.2020.
23. Kapeliushnikov R.I. (2018) On Current State of Economics: Subjective Semi-Sociological Observations. Voprosy ekonomiki, no 5, pp. 110–128 (in Russian). DOI: 10.32609/0042-8736-2018-5-110-128
24. Khesin E.S. (2017) Managing Inflation: Drivers of Change. Money and Credit, no 12, pp. 9–14. Available at: https://rjmf.econs.online/upload/iblock/159/15915048f-473f4aa5e04c77e8ac0981a.pdf, accessed 25.08.2020 (in Russian).
25. Khesin E.S. (2020) Economy of the European Union: A Decade after the Crisis. World Economy and International Relations, vol. 64, no 1, pp. 73–81 (in Russian). DOI: 10.20542/0131-2227-2020-64-1-73-81
26. Lehtimäki J., Sondermann D. (2020) Baldwin vs. Cecchini Revisited: The Growth Impact of the European Single Market. ECB Working Paper Series. No. 2392. DOI: 10.2866/04016
27. Mattli W. (1999) The Logic of Regional Integration. Europe and Beyond, Cambridge: Cambridge University Press.
28. Pelkmans J. (2013) The Economics of Single Market Regulation. Mapping European Economic Integration (eds. Verdun A., Tovias A.), Palgrave Macmillan, pp. 79–104. DOI 10.1057/9781137317360
29. Pelkmans J. (2019) The Single Market Remains the Decisive Power of the EU. CEPS Policy Priorities for 2019–2024, October 18, 2019.
30. Ramírez P., Sigfrido M. (2019) Crises and Transformations of European Integration: European Business Circles during the Long 1970s. European Review of History/Revue Européenne d’Histoire, vol. 26, no 4, pp. 618–635. DOI: 10.1080/13507486.2019.1613964
31. Varnavskij V.G. (2017) Post-Crisis Development: Inflation vs Deflation. World Economy and International Relations, vol. 61, no 1, pp. 5–16 (in Russian). DOI: 10.20542/0131-2227-2017-61-1-5-16
32. Verdun A., Zeitlin J. (2017) Introduction: The European Semester as a New Architecture of EU Socioeconomic Governance in Theory and Practice. Journal of European Public Policy, no 2, pp 137–148. DOI: 10.1080/13501763.2017.1363807
33. von der Leyen U. (2019) A Union that Strives for More. My Agenda for Europe. European Commission. Available at: https://ec.europa.eu/commission/sites/beta-political/files/political-guidelines-next-commission_en.pdf, accessed 25.08.2020.
Review
For citations:
Butorina O.V. The EU Economic System under the Pressure of a Pandemic: Opportunities and Limits of Transformation. Outlines of global transformations: politics, economics, law. 2020;13(4):144-162. (In Russ.) https://doi.org/10.23932/2542-0240-2020-13-4-7
Views:
2343
Email this article 