The COVID-19 outbreak has impacted our – already fragile – European economies as never before in peacetime. Governments and public entities, including the EuropeanUnion, have been called upon to save the economy, whatever it takes, from the worst downturn in living memory and will play a crucial role in relaunching our economies after the outbreak. We have to acknowledge that the capacity to invest of EU members differs widely. We must tackle regional imbalances also within member states, and enhance the ability of the poorest regions to recover and to protect themselves against future shocks.
For this reason, we need an unprecedented and massive sustainable investmentplan, mobilising as much as 5 trillion euros over the next 12 years which will pave the way to a long-term, socially and environmentally resilient, job-rich economic recovery that is inclusive and gender responsive.
Besides the active use of the ECB firepower, whose robust contributions so far is welcomed, this massive sustainable investment plan, will mobilise all fiscal (with theEU budget as key instrument but also national, regional and local budgets), and financial (mainly the EIB) tools we have in order to finance, in the short term, a stimulus package with the Green Deal at its core to recover from the economic downturn and, in the longer run, investment and regulatory reform to transform our economies and make them truly resilient while showing solidarity with third countries and aligned with the care economy. Certain economic sectors, like tourism, are gravely affected by the outbreak, and support to the impacted regions must limit the social impact of the crisis and at the same time set the respective sectors on track for a more sustainable future.
Considering the disproportionate economic impact of the COVID-19 crisis on women, all EU investment decisions must undergo a gender impact assessment. In order to ensure gender equality, detailed gender budgeting must underpin all investment decisions.
The cost of the massive sustainable investment plan should be borne jointly by all EU members according to their economic strength and, in the private economy, those who benefitted from the pre-crisis unfair economic model, particularly those who benefited from tax evasion, tax avoidance or corruption should bear far more of the cost of recovery than those who contributed their fair share. Consequently, the financing of the massive investment plan will be crucial in order to ensure solidarity among EU citizens, among the member states but also with third countries.
This plan must be financed by a mix of Eurobonds (to the tune of at least 1 trillion euros) and new EU revenues coming from new environmental taxes (such as theCarbon Border Adjustment Mechanism, pesticides, plastic and the Kerosene Tax) orcontributions from the multinationals, particularly from the digital sector, and thefinancial sector (such as a Financial Transaction Tax).
Financing a massive investment plan will not be sufficient to overcome this crisis and prevent the next. The massive investment plan should not be yet another form of indiscriminate “corporate welfare” used to rescue companies, businesses and economic sectors, including the banking sector with business models that are environmentally, socially or simply economically unsustainable.
Preserving the very same macro-economic, fiscal and regulatory framework, subsidizing the very same harmful economic sectors or perpetuating the very same way of producing, consuming, transporting or trading that have made our economies lacking in resilience, would only lead to the same kinds of disaster in the future. If “Insanity is doing the same thing over and over again and expecting different results” we have to change our economic model.
We must move towards a new macro-economic, fiscal and regulatory framework which will ensure a robust and resilient economic system fitting within the boundaries of our planet and ensuring inclusiveness and non-discrimination, within and outside the EU by reducing economic, social and territorial inequalities.Furthermore, resilient public services, particularly healthcare systems and the care sector, which have proven their added value in preventing the worsening of the crisis and which have limited financial buffers, will need to be more appropriately funded. The care economy ought to be a pillar of the post-crisis economy and value created int his sector must be accounted for in the calculation of GDP.
Investing in the circular economy and in Research, Development and Innovation will be crucial to move towards a more climate-resilient economy and could be the first step towards a coherent EU-wide industrial policy. Moreover SMEs – including start-ups – are severely hit by the crisis and will require financial support in order to avoid massive and unprecedented layouts. Re-localisation, in certain sectors, such as food, health and pharmaceutical productions, should be supported in order to be less dependent from global supply chains. However, if financial support should be generously granted to keep companies afloat, especially in the most hard hit sectors, profit making with the financial support should not be allowed and it should be mainly used to push for amore environmentally and socially sustainable production.