Better America or better Europe? The enthusiasm for Biden’s revival megaplanes or employment booms, such as the one million more jobs just recorded in March, is likely to make us forget the peak of contagions and layoffs of the Trump era. Conversely, the flops of the vaccination campaigns in Europe obscure the social stability and the response to the first two waves, between spring and autumn. In short, the truth is that the pandemic is proving to be a brutal stress test on the great Western economies, their social systems and their ability to react.
America, says a study in the latest issue of the ECB Bulletin, has paid more overall in terms of jobs. Europe as the rhythm of the economy. It is the result of two different economic and social structures, but also of the different policies adopted: the comparison also allows us to evaluate the inversely proportional relationship between clauses and development.
The incidence of infections was, in fact, higher in the United States than in the European Union. The greater number of infected people is a direct effect of the milder lockdown and quarantine measures adopted across the Atlantic. In return, the more limited closures have given the economy more breath: in the last quarter of 2020, Europe experienced a 4.9 percent reduction in GDP, against a limited decline of 2.4 percent in the American economy. Even if the differences in Europe are considerable. The losses are concentrated, in fact, in the services sector, in particular the recreational ones and, therefore, the countries most exposed in this field, such as Spain and Italy, have suffered the economic impact of the pandemic to a much greater extent than Germany and the Netherlands.
Consumption and employment are the two litmus papers that signal the differences between the two economies, underlines the ECB. During 2020, in fact, household consumption fell, roughly, in the same proportion in America as in Europe. Yet, direct income support was almost double in the US than in Europe. It is proof, say the economists of Frankfurt, that the European interventions, smaller, but also more targeted, have slowed a wider drop in consumption. Crucial, from this point of view, are the liquidity support of companies – which in Europe exceeded 17 per cent of GDP, against 6 per cent of similar American interventions – and those on wages, such as the Italian redundancy fund and similar instruments of the other European countries. Unemployment, in fact, remained more or less at the levels of 2019 in Europe, while in America it reached peaks of 12 per cent last spring. If you take into account those who have exited the labor market (and therefore are not included in the unemployment statistics), the number of people with jobs in Europe fell by only 1.9 per cent last year. while, on the other side of the Atlantic, the decline in employment was 5.5 per cent.
Therefore, Paschal Donohoe – the Irishman who today leads the Eurogroup, or the council of countries that are part of the euro zone – is keen to say the pandemic has shown that European welfare has worked and works. Even the suggestions created by the 2 trillion dollar megaplan of economic stimulus, just launched by Biden, says Donohoe, must be evaluated with this filter: a substantial slice of that money is destined for the families that, in Europe, are reached. instead, from the normal European welfare tools.
The impression that the boost provided to the economy by the White House is considerably more robust despite the record intervention put in place by the EU with the 750 billion euros of the NextGenerationUe, however, is widespread both in economists and in many European rulers. The point, underlines an analysis by the Center for European Reform, is that, probably, the European economy needs more stimuli than the American one and, therefore, it should be Europe that pushes more. This is revealed by another fact, which the ECB does not consider in its comparison, but on which the CER insists: investments. Between 2016 and 2020, investments in America increased, more or less, by 0.7 percent per year. In Europe, on the other hand, they decreased by 0.8 per cent over the same period. And, in 2020, by 1.6 percent.
.