Who Will Rescue the EU from Economic Downturn?
TL/DR –
The European Commission’s Autumn Forecast revised down the EU GDP growth, amidst a certainty of recession by the end of 2023 as voiced by Mario Draghi, former European Central Bank President. The economy has been affected by internal factors and external issues like the ongoing Ukraine crisis, which has disrupted global supply chains and increased energy and food prices. Measures to protect the EU’s economic security include the European Economic Security Strategy and cooperation with the United States, however internal divergences and tensions within the European Union, particularly concerning the Israel-Palestine conflict, cast a shadow on these efforts.
EU’s Economic Downturn and Measures for Recovery
The European Commission revised its EU GDP growth downward in its Autumn Forecast on 15 Nov 2023. Former European Central Bank President, Mario Draghi, also predicts an almost certain euro zone recession by the end of 2023.
Unprecedented Economic Recession
Since 2023, the European economy has shown minimal growth. With consumption spending gradually reduced, Europe tipped into recession at the start of the year. External factors such as the ongoing Ukraine crisis have worsened the situation due to disrupted global supply chains and soaring prices of energy and food.
The EU responded to the crisis politically, economically, and in terms of energy. A €50 billion support package for Ukraine and new sanctions against Russia were emphasized. Despite these measures, these sanctions reportedly hurt the European economy and triggered a worldwide crisis.
EU’s Counteractions
The EU has implemented various measures to protect its economic security and reinforce the economic resilience, including developing a European Economic Security Strategy, de-risking from China, and fostering cooperation with the United States. The effectiveness of these policies remains to be seen.
Biden’s administration passed the Inflation Reduction Act despite EU’s concerns. Likewise, the EU and the U.S. have failed to secure an agreement for a Global Arrangement on Sustainable Steel and Aluminium (GSA), further complicating the EU’s situation.
Future of Europe
Europe is now tasked with restoring price stability and securing strong, green growth. Internal divergences within the European Union, particularly over issues like the Israel-Palestine conflict, have cast a shadow over efforts to remedy the current predicament.
The Europe’s future may well be shaped by the upcoming 2024 European elections.
—
Read More US Economic News