From Barcelona, where he received an award for his work as president of the ECB, Mario Draghi analyzed the current economic, political and social situation in Europe. “The Covid-19 pandemic has hit our lives and our societies devastatingly. At least 3.8 million people have lost their lives – a fifth of them in Europe. Italy and Spain are among the countries most affected by the pandemic with a combined total of over 200,000 deaths“, said the premier recalling the most devastating months of the pandemic.
The situation in Italy and Spain
“The uncertainty created by the pandemic, together with the measures adopted for its containment, have had a heavy impact on the economy“, the Italian premier continued, getting to the heart of the matter with the figures of the economic thrust:”The gross domestic product of the European Union fell by 6.1% – the largest contraction ever recorded. The strongest reduction was recorded in Italy and Spain, where GDP fell by 8.9% and 10.8% respectively“. But now that the epidemic shows signs of retreat, it is time for Mario Draghi to revive the fortunes of Europe and its member countries:”Our minimum goal must be to bring economic activity back at least in line with the pre-pandemic trajectory. Only then can we say that we have overcome the effects of health crisis about our societies and employment“.
It will not be easy by the same admission of the former ECB president, for this reason it is necessary “act quickly and effectively“. The targets hypothesized by the premier are ambitious, but not impossible:”The ideal goal would be to overcome the trajectory of growth pre-pandemic. With higher levels of activity than before, we will be able to offset the increase in debt that occurred during the health crisis“. The Italian premier, therefore, pitted the numbers of the possible recovery:”According to the forecasts of the European Commission, the EU’s gross domestic product will grow by 4.2% this year. In Italy and Spain, an increase of 4.2% and 5.9% respectively is expected. These forecasts could be revised upwards, with the return of confidence between businesses and households“.
Draghi quotes Monnet on the crises
Commitment and effort will be the basis of the recovery and Mario Draghi mentioned in his speech Jean Monnet: “Europe will be shaped by its crises and will be the sum of the solutions found to resolve these crises“. The collaboration and partnership will have to be even more solid in the coming months in the euro area, for”continue to strengthen our institutions and foster a climate of mutual trust“. Europe has great growth potential:”For decades, the rest of the world has looked to Europe for its unique ability to combine equity and prosperity. We are proud of this“. But the premier specified:”We need to monitor the risk of divergence between the euro area economy and that of the United States, and the related consequences regarding the position of their respective central banks.“.
Expansive fiscal policies
Economic growth does not exist alone but is the result of a structured project which is inevitably based on labor policies. And on this aspect Mario Draghi placed an important focus in Barcelona: “L’global economy it is going through a phase of profound changes, including the ecological and digital transition, which will require a reallocation of the workforce. It is essential to maintain favorable conditions of demand in order to guarantee support for workers, who are facing an increasing risk of displacement“. Therefore, as the Italian premier recalled,”employment needs to increase faster to create the jobs we need“.
Europe will still have to move forward with fiscal policies expansive but, as Mario Draghi pointed out, “Investors need to be reassured that fiscal prudence will return as soon as the recovery continues on its own“. For this reason, the premier continued,”we are now focusing on non-recurring tax expenses, which is also why we need to focus these expenses where the impact on growth will be greatest. A long-term peg system will help keep interest rates low and allow governments to continue strengthening interest rates investments“.
The importance of vaccination plans for recovery
There is optimism in Draghi’s words but also caution, because “although the pandemic situation seems increasingly under control, we are still far from the end“. Clear words, which appeal to the need to continue with mass vaccinations:”The development of some vaccines effective has traced a well-defined path to get out of this crisis. Ambitious vaccination campaigns have been launched across the EU, which are managing to save lives and reduce pressure on hospitals. Nearly one in two Europeans has received at least one dose of the vaccine, and one in four is fully vaccinated“. A commitment that is paying off:”Vaccination efforts have also allowed us to reopen our economies“.