Economic Growth in Post-COVID-19 EU

With the response to the COVID-19, we finally saw a European Union based on cooperation rather than competition, flexibility and pragmatism rather than one-size-fits-all rules, and willing to sustain the economy. However, with the health crisis now over, the chances that we will face a return of the “austerity + structural reforms” economic policy mix are high, because there has not yet been a rethinking of Europe’s long-term growth strategy. The Next Generation EU program alone will not produce the growth in aggregate demand necessary to switch to an investment-led growth model, and with stagnant salaries in many countries, a consumption-led growth model does not seem too plausible either. Overcoming austerity (or structural reforms) without changing our long-term growth strategy is an illusion.