May 19, 2020 |
The COVID-19 pandemic represents an unprecedented shock to the European and global economies. Mitigating the economic impact on households, businesses, and the financial system is the priority. But it is also necessary to plan a response that will ensure rapid and sustained recovery.
This crisis could exacerbate weaknesses in the European economy that stem from long-term underinvestment in areas critical for the continent’s future competitiveness. At the onset of the COVID-19 crisis, some EU countries had still not fully recovered from the global financial crisis. Therefore it will be critical to put long-term, structural investment needs at the centre of our recovery efforts. The European Investment Bank has identified three key challenges:
• Rapid technological change amid increasing global competition
• Climate change and achieving net zero carbon emissions by 2050
• Social cohesion in the face of multiple disruptive trends.
To stay competitive amid a technological revolution Europe needs to be at the innovation frontier by closing the investment gap in research and development. We need to create a better environment for competitiveness, with a policy to enhance skills, particularly as a complement to digitalisation. Finally, our innovators need a system that is better suited to their financing needs.
To successfully transition to zero carbon emissions we need to step up our investment across industries, from agriculture to transport. The decarbonisation effect of COVID-19 will be short-lived and Europe must define a mission-oriented approach to turn into a zero-carbon economy.
To ensure that Europe works for everyone new axes of regional divergence must be addressed. Persistent or rising income inequality within EU countries and increasing burdens on households are a concern. In the wake of COVID-19, Europe must invest in social inclusion and in social infrastructure, including for health.
Addressing these challenges needs far-sighted investment. Collaboration is also critical for success. Instead of merely reacting to change we must embrace reforms. Only then can we work towards a society that is productive, sustainable and inclusive by design.
More info on the EIB response to COVID-19: https://www.eib.org/en/about/initiatives/covid-19-response/index.htm
• Marie Antonie Kerwien, Communication | a.kerwien[at]eib.org
Compliments of the European Investment Bank – a member of the EACCNY.