Europe's nations and regions

George Alogoskoufis, 23 February 2021

Greece experienced a deep recession in 2020, and pandemic relief measures have led to further increases in its exorbitantly high public debt. This column outlines three potential methods for dealing with increasing debt after the crisis: (1) increases in taxation/reductions of government spending, (2) debt restructuring and (partial) debt write-offs, or (3) a policy of ‘gradual adjustment’ in which economic growth helps the debt burden shrink relative to GDP over time. The precise policy mix will involve significant coordination among euro area countries, but Greece must also implement domestic reforms to facilitate a dynamic and sustainable recovery. 

Vincent Aussilloux, Adam Baïz, Matthieu Garrigue, Philippe Martin, Dimitris Mavridis, 19 February 2021

The Covid-19 crisis has presented policymakers across the euro area with an unprecedented challenge, not least of all because the shock has come to both the supply side and the demand side of the economy. This column presents a preliminary analysis of different nations’ responses so far, focusing on which measures have been deployed to address each side of the economic shock and where a ‘mixed approach’ has been taken to work in tandem. At a time where coordinated action may be needed, there is a concerning level of inconsistency in strategy. 

Maarten Verwey, Milan Vyskrabka, Philipp Pfeiffer, 15 February 2021

The breakthroughs in vaccine development in the autumn of 2020 and the start of mass vaccination campaigns in 2021 brightened the near-term outlook for the EU economy. However, hopes of a quick recovery have, to some extent, been overshadowed by the recent resurgence of the pandemic. In order to highlight the extent of prevailing uncertainty and the importance of vaccinations for EU’s economic trajectory, this column describes the optimistic and pessimistic model-based scenarios for the EU economy forecast by the European Commission. It finds that effective vaccines and their quick roll-out could add about three percentage points to annual growth of EU this year. 

Christian Bluth, 10 February 2021

Christian Bluth, author of a new CEPR Press eBook on Europe's trade strategy, tells Tim Phillips that nations are increasingly using global trade as a means of political arm-twisting. Should the EU do the same?

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Bary Pradelski, Miquel Oliu-Barton, 09 February 2021

EU member states agreed to adopt a joint strategy to exit Covid-19, based on setting public health measures and travel restrictions dependent on a region’s epidemiological situation. The strategy follows three of the four key principles of green zoning as introduced in the original version of this column, published in April and circulated to European decision makers: (1) divide each country into smaller zones; (2) label zones green if the virus is under control, and red otherwise; (3) adopt colour-dependent public health measures. However, the strategy falls short on the last and critical principle: (4) allow free travel between green zones, but control other travel. This update argues that the unconditional protection of green zones through travel restrictions must become the EU’s focus to curb the spread of the virus, avoid the repeated lockdowns experienced over the past year, and minimise economic and social damage.

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