EU crisis: Brussels slashes growth forecasts as shambolic vaccine rollout plagues bloc
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In its latest quarterly forecasts, the European Commission has predicted that the EU’s gross domestic product would increase by 3.7 percent this year, down from its previous forecast of 4.2 percent. Its economists warned the EU’s economic recovery is directly linked to the bloc’s ability to successfully deliver doses of Covid jabs to member states. They said the downward revision in their winter forecast was “related to the evolution of the pandemic and the pace, efficiency and effectiveness of vaccination rollout”.
The Commission said it was forced to downgrade its economic forecasts because of the continued “uncertainty and risks” surrounding the latest wave of COVID-19 infections battering the bloc.
“In terms of negative risks, the pandemic could prove more persistent or severe in the near-term than assumed in this forecast or there could be delays in the roll-out of vaccination programmes,” its report said.
“This could delay the easing of containment measures, which in turn affect the timing and strength of the expected recovery.
“There is also a risk that the crisis could leave deeper scars in the EU’s economic and social fabric, notably through widespread bankruptcies and job losses.
“This would also hurt the financial sector, increase long-term unemployment and worsen inequalities.”
The Commission’s winter forecast didn’t price in the threat of further delays to to the bloc’s vaccination roll-out.
Analysts at German finance giant Allianz recently warned Europe’s Covid jab scheme was facing a “five-week delay”, which could cost its economy €90 billion if left uncorrected.
Economy commissioner Paolo Gentiloni said: “Europeans are living through challenge timings.
“We remain in the painful grip of the pandemic, its social and economic consequences all too evident.”
The former Italian prime minister predicted the EU countries would see an economic boost when lockdown measures can be lifted as more people are vaccinated.
“As increasing numbers are vaccinated over the coming months, an easing of containment measures should allow for a strengthening rebound over the spring and summer,” he said.
“The EU economy should return to pre-pandemic GDP levels in 2022, earlier than previously expected – though the output lost in 2020 will not be recouped so quickly, or at the same pace across our Union.
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“This forecast is subject to multiple risks, related for instance to new variants of COVID-19 and to the global epidemiological situation.”
Commission vice-president Valdis Dombrovskis added: “We will still have a great deal to do to contain the wider socio-economic fallout.
“Our recovery package will go a long way to supporting the recovery, backed up by vaccination roll-out and a likely upswing in global demand.”
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The Eurozone single currency bloc is expected to grow 3.8 percent, a faster rate than the wider EU economy.
The Netherlands (1.8 percent), Germany (3.2 percent) and Ireland (3.4 percent) are all forecast to grow less than the average prediction for the EU.
In contrast, the main recipients of funds from the bloc’s €750bn recovery fund – France (5.5 percent) and Spain (5.6 percent) – are expected to make bigger gains.
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