“The European economy is recovering strongly from the shock of the pandemic. And we should be clear that this was not taken for granted: it was not inevitable. Although you talk about Recovery as a permanent tool, it was designed as a one-off. Our main objective is to apply this tool in the best possible way ». This was stated by the European Commissioner for Economy, Paolo Gentiloni, at the press conference to present the start of the public debate for the revision of the Union’s tax rules. “This recovery in growth is taking place thanks to two key factors: the strength of the political, fiscal and monetary, national and European response, which avoided much worse economic and social damage during the pandemic; and the success of the EU vaccination campaign which has allowed our economies to reopen widely since the spring, ”explained Gentiloni.
INVESTMENTS TO SUPPORT GROWTH
“We cannot be satisfied with just a rebound of our economies. We must aim for growth that is both sustained and sustainable, and it is with this imperative in mind that we are relaunching this review of our economic governance ”. Gentiloni continued. Who specifies: «Changes are needed. None of the problems we put on the table when we first launched it twenty months have become irrelevant. But some of the issues highlighted have become even more pressing. And the new challenges are even more demanding ».
Among the open dossiers there is also that of public investments, which the policies following the financial crisis have reduced to a minimum in the eurozone: “Investments have sustained the impact of the cuts – said Gentiloni – while fiscal policies have often been anything but favorable to growth “.
The restart of investments will be essential to support the green and digital transition: “We estimate that the additional need for public and private investments linked to the green and digital transitions will be almost 650 billion euros per year until 2030. The green transition alone represents 520 billion euros a year “.
A large chunk of these resources – about 390 billion a year – will be allocated to the transport and energy sectors, with a 50% increase compared to the past: “The Recovery and Resilience Plan will certainly contribute to meeting these needs , providing 338 billion euros in grants and up to 386 billion euros in loans until 2026 ”, added Gentiloni. Investments that will see competition from the private sector of governments of individual countries, which is why “a key question that must be considered is how our framework will facilitate these investments more effectively”.
DEBT REDUCTION
Gentiloni reserved further food for thought on the need to operate on the budget rules valid for member countries, in order to favor a gradual reduction of the real and sustainable debt based on the debt / GDP ratio, which constitutes one of the most rigid limits imposed. from Europe: «The reduction of the high public debt was obviously already a challenge in the years before the pandemic, given the context of weak growth and very low inflation, as we highlighted in February last year. Today, strong countercyclical fiscal support – estimated at nearly 19% of GDP between 2020 and 2022 – has been essential to sustain our health systems and keep our workers employed. It was the right thing to do. But it has also led to higher debt levels, averaging 100% in the euro area ”.