Euro area economic policy 2021 (additional opinion)

Key points:

The EESC

• acknowledges that government expenditure will be key to alleviate the situation as the EU is going through the most serious period in the economic history of European integration;
• appreciates the fast reaction at EU as well as at Member State level and welcomes the fact that the twin transition process has become a substantial part of the recovery effort and strategy;
• calls for consideration to be given to the phenomenon of divergences across the euro area and for a prudent response to be given to the significantly worsened fiscal performance, and within a common framework;
• welcomes the flexibility adopted in tailor-made national economic policies and recovery programmes that respect the specific needs of Member States. This flexibility is also recommended for the implementation of the Recovery and Resilience Programmes;
• underlines the need to achieve a new balance between monetary and fiscal policies and to eliminate the identified macroeconomic imbalances in the coming period;
• is aware of the significant rise of debt-to-GDP ratios in the last year. After economic recovery has taken hold, the reduction of debt-to-GDP ratios must be done in a way that promotes inclusive growth, avoids social injustices, negative effects for companies and on the labour market;
• supports the links between the recovery process, fiscal consolidation and green budgeting practices;
• believes that the lessons from the pandemic should be reflected in the overall effort to contribute to the economically effective, socially fair and environmentally sustainable development of the EU and the euro area in the long run;
• calls for the integrity of the single market to be maintained and for any signs of its fragmentation to be prevented, as a fundamental condition for the future positive performance of the EU and euro area economies. This integrity should be further supported through suitable progress in the development of the Banking Union and the Capital Market Union;
• acknowledges that some important lessons from the previous crisis were learnt and were used to support macroeconomic stability, and calls upon the responsible EU institutions to improve the EU's economic policy governance and to ensure that the lessons learnt from the pandemic are consequently reflected in continuous reform efforts.