Economic and Financial Affairs

The euro area economy is forecast to grow by 4.3% this year and 4.4% next year. This represents a significant upgrade of the growth outlook compared to the Winter 2021 Economic Forecast which the Commission presented in February. Growth rates will continue to vary across the EU, but all Member States should see their economies return to pre-crisis levels by the end of 2022. The EU and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased. This growth will be driven by private consumption, investment, and a rising demand for EU exports from a strengthening global economy. Public investment, as a proportion of GDP, is set to reach its highest level in more than a decade in 2022. This will be driven by the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU. The risks surrounding the outlook are high and will remain so as long as the shadow of the COVID-19 pandemic hangs over the economy. Other potential upside or downside risks include the propensity of households to spend, consumers' relative desire to maintain high levels of precautionary savings, the timing of policy support withdrawal, the impact of corporate distress on the labour market and the financial sector, and growth in the global economy.

This year’s focus will be on Making it Happen: Building the new economy we want. Check out the website for this year’s programme and the full line-up of high-level speakers, including CEOs and academics. As always, we welcome your support in spreading the word! Please share our #EUBEF21 social media posts on Twitter and Facebook. Join the #EUBEF21 conversation on Twitter and follow us for updates.

At 109.7 (EU) / 110.3 (EA) points, the ESI scores markedly above its long-term average and pre-pandemic level for the first time since the outbreak of COVID-19 on the continent. In addition, the Employment Expectations Indicator (EEI) saw a forceful increase (+9.9 points to 107.9 in the EU and +9.3 points to 107.1 in the euro area), which lifted the indicator both above its long-term average and pre-pandemic level. In the EU, the ESI’s increase was driven by improving confidence in all surveyed business sectors (i.e. industry, services, retail trade, construction) and among consumers. The ESI rose markedly in all of the six largest EU economies, particularly in Poland (+11.3), followed by the Netherlands (+10.7), Spain (+9.1), France (+8.5), Germany (+5.7) and Italy (+5.3). Thanks to the latest increases, sentiment in all six countries is above its long-term average of 100.

The Communication sets out both a long-term and short-term vision to support Europe's recovery from the COVID-19 pandemic and to ensure adequate public revenues over the coming years. It aims to create an equitable and stable business environment, which can boost sustainable and job-rich growth in the EU and increase our open strategic autonomy. The Communication takes account of the progress made in the G20/OECD discussions on global tax reform.

The InvestEU’s climate and environmental tracking guidance was recently published, adding to the previously published sustainability proofing guidance. The Commission in collaboration with experts from potential implementing partners developed both guidance documents. The guidance will help InvestEU to support sustainable investments in all sectors of the economy and will contribute to the dissemination of sustainable practices among private and public investors. In terms of InvestEU Governance, the Commission published a call for applications for the Investment Committee, which was open until 17 May. The Investment Committee, consisting of 12 independent experts, will play a central role in the InvestEU programme, being responsible for examining proposed financing and investment operations for the InvestEU Fund. The Commission also launched the first Calls for Expression of Interest for the InvestEU Fund and the InvestEU Advisory Hub. Eligible institutions and entities have been invited to become an implementing or advisory partner under the InvestEU. In addition to the EIB Group, partners can provide finance or advisory support for investments in sustainable infrastructure, research, innovation and digitization, as well as to support increased access to financing for SMEs and the deployment of social projects. Interested parties can apply to the European Commission either by 30 June or 1 by October 2021. The first meeting of the InvestEU Advisory Board already took place on 29 April. The Advisory Board will advise the Commission and the InvestEU Steering board on the implementation and functioning of the InvestEU Programme including the design of financial products to be implemented, as well as on market developments and sub-optimal investment conditions. The Board is composed of representatives from the Commission, the EIB Group, each EU country, (potential) implementing partner and advisory partner, the European Economic and Social Committee and the Committee of the Regions. The results of the meetings will be published on the InvestEU website.

At the end of April 2020, there were more than 42 million applications for support for employees on short-time work or similar schemes in the EU27. This amounts to almost 27% of all workers. As COVID measures are gradually phased out, however, how can Europe ensure there are enough jobs and that people have the right skills for the jobs of the future? European Commissioner for Jobs and Social Rights, Nicolas Schmit, believes that companies play a key role in training. "It's up to the companies to retrain, to reskill, to upskill a lot of their staff,” he says, adding that companies must "reskill those with the lowest level of skill because their jobs are also changing.” The European Commission’s EASE (Providing Effective Active Support to Employment) recommends that countries create new jobs by supporting entrepreneurs and training people in new skills to get jobs in growing sectors such as green and digital. To help finance this, there is money available from the Recovery Fund and the European Social Fund Plus. The EU’s goal emerging from the pandemic is a ‘strong social Europe’. Its Pillar of Social Rights Action Plan sets out three targets to be achieved by 2030. As Nicolas Schmit notes, “We need economic development, but at the same time, we also need social dimensions and cohesion in our societies.”