Europe’s recovery from the effects of the crisis triggered by the coronavirus pandemic and the collapse in oil prices has stalled. According to Bloomberg, the culprits could be Spain and Italy and a reduction in their GDP. According to the IHS Markit index, which is an indicator of economic health, output rose only in manufacturing in August, while the larger services sector saw only a slight increase.
Economist Chris Williamson finds that the momentum for the recovery of the Eurozone as a whole is lost. “There will probably still be a strong economic recovery in the autumn after the collapse seen in the spring,” he says, and stresses that EU authorities still need to focus on recovery policies.
The EU economy shrank by a record 14.4 percent year-on-year in the second quarter of 2020. This is the strongest decline since the beginning of statistics (since 1995). In mid-summer, EU leaders agreed on a rescue plan for 750 billion euros. Most of this money — 500 billion-will go to irrevocable grants for the EU countries most affected by the pandemic.