OECD Economic Surveys: European Union 2021
The COVID-19 pandemic plunged the EU into its worst-ever recession and risks increasing inequalities, notably between regions. Thanks to a bold and innovative policy response, including a common instrument to finance national recovery plans (Next Generation EU), growth is rebounding, but ambitious reforms will be essential to heal the scars of the pandemic and succeed in the green and digital transitions. This Survey has three main messages. Firstly, increasing public and private investment is key to speed up the recovery. Improving European interconnections and fostering cross-country collaboration in innovative industrial projects should be priorities. Secondly, the transition towards climate neutrality and a circular economy will enhance well-being while improving European industrial strengths. Better pricing of carbon emissions, new regulatory tools and more R&D funding will all help reinforcing the transition towards a greener economy. Finally, to avoid the rise in regional inequalities, poorer regions need to improve their productive specialisation. For that purpose, cohesion and rural development policies need to be revamped to gain in efficiency, notably by supporting more effectively innovation.
SPECIAL FEATURE: REGIONAL CONVERGENCE
Also available in: French
Key policy insights
The COVID19 pandemic has raised multiple challenges for the European Union (EU) and often compounded existing weaknesses. The EU has been worse hit than most other economic areas, suffering in 2020 its largest-ever recession (Figure 1.1). Territorial inequalities risk increasing across countries and regions, potentially worsening divergent economic trends over the past decade. The disproportionate impact of the crisis on sectors with abundant low-skilled jobs, such as hospitality and trade, could increase inequality and poverty.
Also available in: French
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