Last chance EU! Bloc warned recovery fund won’t change course of ‘devastating depression’

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The EU has unveiled a proposed 750 billion euro recovery plan to get the continent back on its feet after the pandemic. However, there are already concerns over whether it will be enough to cushion the economic harm done by the coronavirus lockdowns. Rémi Bourgeot, an economist and associate fellow at IRIS, spoke to FRANCE 24 about why it will be difficult for the emergency fund to “change the course”.

He said: “It’s a very substantial amount and would be very impressive to address a normal recession.

“But facing such a devastating depression with no recovery in sight, this is not that substantial.

“Of course, there are clear political limits to what can be done.

“The fact that France and Germany were already able to agree on something of that scale is very significant.”

Mr Bourgeot continued: “But we’re really witnessing an economic crisis of a different magnitude.

“Although this is really a strong political signal and showing some kind of cohesion, it’s really not going to change the course of the depression we’re facing.

“It’s really important in terms of the political signal and it’s going to have an economic impact if it’s used in targeted measures.

“What’s really striking here is that it’s going to benefit those countries that have been hit hardest much more than other countries.”

The grants that are going to be spent will not depend on a nation’s contributions to the union.

However, Mr Bourgeot outlined the reasons why the recovery package is unlikely to “change the course” of the economic crisis.

One “part of the problem” is that it might take too long for the money to reach peoples’ hands.

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The economist added: “Also looking at this year’s recession, we’re talking along the lines of eight percent contraction.

“Even the ECB acknowledges that it could get much worse than 10 or 12 percent, or even more than that.

“So this plan is a lot of money indeed, but facing such a devastating crisis, it’s not going to be enough.

“But it’s also important because those countries which are hardest hit are the same which were hardest hit by the Europe crisis and have a bad fiscal position.

“They don’t feel allowed in this crisis to spend as much on stimulus as those countries which are less hit by the crisis.”

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