A New EU Economic Paradigm: Green, Digital and United

“I don’t think new economic paradigms are created ex ante,” said Paolo Gentiloni, European Commissioner for the Economy, considering “Post-COVID Economic and Social Challenges” at the opening session of the Brussels Economic Forum 2021. But after a few years it will become clear that “important new things” are happening, as the EU looks to recover from a crippling health crisis. Gentiloni and other panel speakers said that the lessons learned were likely to promote a stronger role for the EU itself.

Speaking at the Brussels-based event, held online for the second year in response to health and social distancing rules, Gentiloni explained that common EU procurement of COVID vaccines meant “every European citizen now knows we need to strengthen our health union.”

Gentiloni said the health crisis also showed that the EU has learned from mistakes made during the financial crisis of 2008 and 2009. “It was said after the last crisis that the EU’s reaction was too little and too late,” the Italian commissioner explained. “The financial crisis created real divergences. This is why one of the main goals of NextGenerationEU is to tackle the risk of huge divergences among Member States."

NextGenerationEU is a more than €800 billion recovery package designed to help repair economic and social damage caused by the Coronavirus pandemic. It pledges to support the 27 EU member states in building a greener digital society.

“The issue of sustainability became overwhelming in the pandemic,” the commissioner said, with the shift to online habits also proving to be “a good opportunity for digitalisation.”

“There is now a good opportunity for the EU to become not only the queen of regulation but also strong in competitiveness,” Gentiloni said. “In the near future we could come to define this moment as the new economic paradigm.”

Daniela Schwarzer, Executive Director for Europe and Eurasia, Open Society Foundations, said it was natural that countries had at first tried to address the pandemic through national measures. “The EU didn’t have the competencies to deal with a health crisis,” she explained.

She agreed with Gentiloni that the EU had in this case “shown a capacity to self-correct,” which, when compared to the response to the financial crisis, was “faster, more determined, and very quickly a European signal.”

Nonetheless, compared with other economies the EU had still been relatively slow, Schwarzer cautioned. China responded earlier, while the US was quick to act “and to put together an even bigger recovery package” as soon as President Joe Biden took office.

André Sapir, Professor at the Institut d'Études Européennes, Université Libre de Bruxelles, agreed that the pandemic had revealed divergences between countries that should be addressed by NextGenerationEU. “There are inequalities in our societies,” he said. “The pandemic has reinforced that.”

“The recovery package is an important aspect” of addressing those “disparities,” Sapir said. The professor reminded the audience that “vaccination is also unequal” among different regions and groups. “Some citizens, generally those with a better education and income, are more likely to be vaccinated.” This is also “an opportunity” for a more coordinated approach to bring benefits, he said.

After the second world war, the ULB professor said, countries managed “to build on the ashes” and grow back bigger than before, in terms for instance of education and social care. “But this is not an easy path.”

Melinda Mills, director of the Leverhulme Centre for Demographic Science (LCDS) at the University of Oxford, said the pandemic had shown “the unpreparedness, the cracks and inequalities, of healthcare systems.”

While some sectors, such as tourism, hospitality, culture and the arts, were hit particularly hard, Mills said the pandemic had in many cases accelerated changes in employment that were already underway. This is true for the shift to freelance and intermittent work, she said, which raises many questions about workers’ rights and pensions.

But although “a whole generation of youth has had its opportunities disrupted,” Mills said she hoped there was “an exciting future for employment ahead.” This will include many new types of jobs in the green and digital transitions promoted by the EU, said the director.