Every September, the president of the European Commission delivers the State of the Union address to the European Parliament. The address takes stock of the achievements of the past year and presents the priorities for the year ahead.
The president also sets out how the commission will address the most pressing challenges faced by the European Union and proposes ideas for shaping the EU’s future.
Undoubtedly, tomorrow’s speech will focus very much on Europe’s response to COVID-19, especially on the economic front and through European instruments that have aided the recovery. In fact, Europe’s economy is gaining momentum in its recovery from the coronavirus crisis.
Growth in the euro area outpaced both the US and China in the last quarter, more than 70 per cent of EU adults have been fully vaccinated against COVID-19, investment is booming and unemployment is falling.
This has been the result of several intersecting factors.
Strong government responses and interventions have played a key role in this recovery, supported by strong consumer demand on the back of excess savings. However, the EU’s financial package was a key contributor to this improved performance.
The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed in Europe.
The Recovery and Resilience Facility, a temporary recovery instrument that allows the commission to raise funds to help repair the immediate economic and social damage brought about by the coronavirus pandemic, is offering an unprecedented opportunity to speed up the recovery in Europe and reinforce the commitment to the twin transition: green and digital.
Countries have already started receiving the first tranche of disbursement, equivalent to 13 per cent of the total and which will boost economies even more through their planned investments.
Considering this, Malta must also continue its transition towards a greener and more digital economy. As a country, we need to double up our reforms especially on the governance side to ensure we get off the grey list and use this as an opportunity to truly improve our way of doing business.
There is widespread optimism that the worst of the COVID-19 crisis in Europe is over- JP Fabri
Malta is a month away from Budget week and even here, the government’s swift implementation of its recovery plan together with its use of European funds will be a key pillar for economic growth and transformation.
Despite these interventions, the risks to Europe’s economy remain on the high side.
The biggest warning sign comes from bottlenecks in the global supply chain that have left manufacturers grappling with shortages and soaring prices of everything from semi-conductors and paper to steel and plastics.
Supply chain problems could hit consumer spending if they fuel higher eurozone inflation, which has already risen to a decade-long high of three per cent in August and is expected to keep rising for several more months.
The second risk for Europe’s recovery is if the Delta variant or another strain causes a further damaging wave of COVID-19 infections, despite rising vaccination levels.
A further risk for the export-focused eurozone economy is that the recent slowdowns in the US and China could weigh on growth in the bloc.
It is, therefore, critical that the commission reiterates its commitment to supporting Europe’s economy and to building a modern and resilient economy which transitions to green and digital.
I am confident that in tomorrow’s speech, European Commission President Ursula von der Leyen will focus on both the European Green Deal and the Digital Strategy as foundations for building a stronger Europe and one that works for people.
Despite these clouds on the horizon, there is widespread optimism that the worst of the COVID-19 crisis in Europe is over and that the region is set for a couple of years of strong growth. The European Central Bank sees growth reaching five per cent this year and 4.6 per cent in 2022.
Tomorrow’s speech will further reinforce this positive belief, through the president’s commitment to ensuring that member states continue to implement the needed reforms and investments, which will contribute to a transformed and more resilient European economy.