Main results
Economic impact of COVID-19 and recovery measures
Ministers exchanged views on the progress achieved on the implementation of measures to respond to the COVID-19 crisis at EU level. The European Commission and the European Central Bank (ECB) presented their assessment of the current situation.

We are at a crucial moment in our response to the economic consequences of the COVID-19 crisis. We are stepping up our efforts to make sure that companies, employees and member states can access the funds we agreed on earlier this spring. In parallel, crucial negotiations are also ongoing on the recovery plan. Ministers today reiterated their commitment to swiftly deliver on an effective response for a strong recovery.
Olaf Scholz, Germany’s Federal Minister of Finance and Vice Chancellor

Ministers took stock of the implementation of the three safety nets:
the ESM pandemic crisis support for member states: this instrument, based on an existing ESM precautionary credit line adjusted in light of the COVID-19 crisis, became operational on 15 May 2020.
the temporary support to mitigate unemployment risks in an emergency (SURE): this Commission-managed scheme can provide up to €100 billion of loans under favourable terms to member states and will become operational once all member states have provided their guarantees. This process is expected to be completed by the end of the month.
the EIB pan-European guarantee fund to support businesses: the €25 billion guarantee fund, which will mobilise investments across EU industries, will become operational as soon as member states accounting for at least 60% of EIB capital have provided their guarantees. The fund is expected to be finalised by the end of July.
Ministers also took stock of ongoing work on the EU’s recovery post COVID-19. Pending a decision by the European Council, work on the technical aspects of the recovery plan legislation continues.
COVID-19: the EU’s response to the economic fallout (background information)
Capital markets union
The Chair of the High Level Forum on the capital markets union (CMU), Thomas Wieser, presented the forum’s final report, published on 10 June. This report sets out 17 recommendations aimed at removing the biggest barriers in the EU’s capital markets and increase European capital markets’ competitiveness.
Ministers exchanged views on the priorities to bring the CMU forward, in particular with a view to overcoming the economic consequences of the COVID-19 crisis and to creating solid EU-based alternatives for capital markets after Brexit. This discussion will feed into the preparations of a new Commission CMU action plan, which is expected to be published by the end of the year.

Strengthening the Capital Markets Union will be among the top priorities of our Presidency in the economic field. Capital markets have a crucial role to play in the post-COVID recovery, to provide additional funding sources for our companies and to facilitate the green and digital transformations. Our goal is to agree a common approach in the Council on priorities for further strengthening this initiative by the end of the year.
Olaf Scholz, Germany’s Federal Minister of Finance and Vice Chancellor

High-Level Forum on capital markets union (European Commission)
Convergence reports
Ministers took stock of the convergence reports published by the European Commission and the ECB on 10 June. The reports examine whether non-euro member states satisfy the necessary conditions to adopt the single currency. They cover seven countries: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden.
The reports are based on convergence criteria, including price stability, sound public finances, exchange rate stability and convergence in long-term interest rates. The compatibility of national legislation with Economic and Monetary Union rules is also assessed. The reports concluded that none of the countries meet all the formal conditions for joining the Euro area yet.
Convergence report 2020 (European Commission)
Convergence report 2020 (European Central Bank)
Information from the Presidency
The German Presidency outlined its priorities in the area of economic and financial affairs. It will focus on Europe’s comprehensive and ambitious response to the COVID-19 pandemic. It will also work on modernising the EU’s tax policy, strengthening the banking union, advancing the capital markets union, promoting a secure and innovative digitalisation of the financial services sector and combatting money laundering and terrorist financing. Sustainable finance also remains of central importance.
The Presidency also informed ministers about preparations of the upcoming G20 finance meeting and progress on ongoing international issues.
Compliments of the European Council.

The European Commission has today adopted a Communication to help national authorities, businesses and citizens prepare for the inevitable changes that will arise at the end of the transition period. Changes will occur to cross-border exchanges between the EU and the UK as of 1 January 2021– irrespective of whether an agreement on a future partnership has been concluded or not.
Commission President Ursula von der Leyen said: “The British people decided in a democratic election to leave the European Union and its benefits. This means that no matter how hard we now work towards a close partnership agreement, our relationship will inevitably change. My top priority is to ensure that EU citizens and businesses are as well prepared as possible for 1 January 2021”.
The European Commission’s Chief Negotiator, Michel Barnier, said: “Public administrations, businesses, citizens and stakeholders will be affected by the UK’s decision to leave the EU. Following the UK Government’s decision not to extend the transition period, we now know that these changes will take place on 1 January 2021 – deal or no deal. We are helping them to prepare as best as they can.”
Today’s Communication “Getting ready for changes” sets out a sector-by-sector overview of the main areas where there will be changes regardless of the outcome of the ongoing EU-UK negotiations, and sets out measures that national authorities, businesses and citizens should take in order to be ready for these changes. It in no way seeks to prejudge the outcome of negotiations. As such, it does not examine the possible implications of a failure to reach an agreement, nor does it consider the need for contingency measures.
Its aim is to ensure that all public administrations and stakeholders are ready and well prepared for the unavoidable disruptions caused by the UK’s decision to leave the EU and to end the transition period this year. These measures complement actions taken at national level.
In parallel, the European Commission is reviewing and, where necessary, updating all 102 stakeholder notices, published at the time of the withdrawal negotiations – many of which continue to be relevant for the end of the transition period. The list of more than 50 updated notices is in annex to the Communication and all are available on the Commission’s dedicated webpage.
Next steps
The European Commission will work closely with national authorities, businesses and other stakeholders over the coming months to help them prepare for the far-reaching changes that will occur at the end of the year, irrespective of whether an agreement is found.
Background
The United Kingdom left the European Union on 31 January 2020.
The Withdrawal Agreement concluded between the EU and the UK secured an orderly departure of the United Kingdom, providing legal certainty in important areas including citizens’ rights, the financial settlement and the avoidance of a hard border on the island of Ireland.
The Withdrawal Agreement provided for a transition period, which ensures that EU law continues to apply to the UK from 1 February 2020 to 31 December 2020. At the end of the transition period, the UK leaves the Single Market and the Customs Union, thereby putting an end to the free movement of people, goods and services. The United Kingdom will also no longer participate in the EU’s VAT and excise duty area, nor in EU policies and programmes, and will stop benefitting from the EU’s international agreements. Changes will affect both sides and happen irrespective of whether or not an agreement on a future partnership between the EU and the United Kingdom is reached.
The EU and the UK are currently negotiating an agreement on a new future partnership, but even if such an agreement is concluded, the future relationship between the EU and the UK will be very different from what it is currently, including the end of frictionless trade.
There will inevitably be barriers to trade in goods and services and to cross-border mobility and exchanges. Public administrations, businesses, citizens and stakeholders on both sides will be affected and must therefore prepare.
For more information
Communication “Getting ready for changes. Communication on readiness at the end of the transition period between the European Union and the United Kingdom” (9 July 2020)
European Commission webpage: “The EU and the United Kingdom – Getting ready for the end of the transition period”
Compliments of the European Commission.

Improving drivers’ working conditions

Clear rules on posting of drivers

Better enforcement to fight illegal practices

Parliament backs revised rules to improve drivers’ working conditions and stop distortion of competition in road transport.

MEPs endorsed all three legal acts without any amendments, as adopted by EU ministers in April 2020. The political agreement with the Council was reached in December 2019.
The revised rules for posting of drivers, drivers’ driving times and rest periods and better enforcement of cabotage rules (i.e. transport of goods carried out by non-resident hauliers on a temporary basis in a host member state) aim to put an end to distortion of competition in the road transport sector and provide better rest conditions for drivers.
Better working conditions for drivers
The new rules will help to ensure better rest conditions and allow drivers to spend more time at home. Companies will have to organise their timetables so that drivers in international freight transport are able to return home at regular intervals (every three or four weeks depending on the work schedule). The mandatory regular weekly rest cannot be taken in the truck cab. If this rest period is taken away from home, the company must pay for accommodation costs.
Fairer competition and fighting illegal practices
Vehicle tachographs will be used to register border-crossings in order to tackle fraud. To prevent systematic cabotage, there will be a cooling-off period of four days before more cabotage operations can be carried out within the same country with the same vehicle.
To fight the use of letterbox companies, road haulage businesses would need to be able to demonstrate that they are substantially active in the member state in which they are registered. The new rules will also require trucks to return to the company’s operational centre every eight weeks. Using light commercial vehicles of over 2.5 tonnes will also be subject to EU rules for transport operators, including equipping the vans with a tachograph.
Clear rules on posting of drivers to ensure equal pay
The new rules will give a clear legal framework to prevent differing national approaches and ensure fair remuneration for drivers. Posting rules will apply to cabotage and international transport operations, excluding transit, bilateral operations and bilateral operations with two extra loading or unloading.
Next steps
The adopted rules will enter into force after they are published in the Official Journal of the EU in the coming weeks.
The rules on posting will apply 18 months after the entry into force of the legal act. The rules on rest times, including the return of drivers, will apply 20 days after publication of the act. Rules on return of trucks and other changes to market access rules will apply 18 months after the entry into force of the act on market access.
Compliments of the European Parliament.

To become climate-neutral by 2050, Europe needs to transform its energy system, which accounts for 75% of the EU’s greenhouse gas emissions.  The EU strategies for energy system integration and hydrogen, adopted today, will pave the way towards a more efficient and interconnected energy sector, driven by the twin goals of a cleaner planet and a stronger economy.
The two strategies present a new clean energy investment agenda, in line with the Commission’s Next Generation EU recovery package and the European Green Deal. The planned investments have the potential to stimulate the economic recovery from the coronavirus crisis. They create European jobs and boost our leadership and competitiveness in strategic industries, which are crucial to Europe’s resilience.
Energy System Integration
The EU Strategy for Energy System Integration will provide the framework for the green energy transition. The current model where energy consumption in transport, industry, gas and buildings is happening in ‘silos’ – each with separate value chains, rules, infrastructure, planning and operations – cannot deliver climate neutrality by 2050 in a cost efficient way; the changing costs of innovative solutions have to be integrated in the way we operate our energy system. New links between sectors must be created and technological progress exploited.
Energy system integration means that the system is planned and operated as a whole, linking different energy carriers, infrastructures, and consumption sectors. This connected and flexible system will be more efficient, and reduce costs for society. For example, this means a system where the electricity that fuels Europe’s cars could come from the solar panels on our roofs, while our buildings are kept warm with heat from a nearby factory, and the factory is fuelled by clean hydrogen produced from off-shore wind energy.
There are three main pillars to this strategy:
First, a more ‘circular’ energy system, with energy efficiency at its core. The strategy will identify concrete actions to apply the ‘energy efficiency first’ principle in practice and to use local energy sources more effectively in our buildings or communities. There is significant potential in the reuse of waste heat from industrial sites, data centres, or other sources, and energy produced from bio-waste or in wastewater treatment plants. The Renovation Wave will be an important part of these reforms.
Second, a greater direct electrification of end-use sectors. As the power sector has the highest share of renewables, we should increasingly use electricity where possible: for example for heat pumps in buildings, electric vehicles in transport or electric furnaces in certain industries. A network of one million electric vehicle charging points will be among the visible results, along with the expansion of solar and wind power.
For those sectors where electrification is difficult, the strategy promotes clean fuels, including renewable hydrogen and sustainable biofuels and biogas. The Commission will propose a new classification and certification system for renewable and low-carbon fuels.
The strategy sets out 38 actions to create a more integrated energy system. These include the revision of existing legislation, financial support, research and deployment of new technologies and digital tools, guidance to Member States on fiscal measures and phasing out of fossil fuel subsidies, market governance reform and infrastructure planning, and improved information to consumers. The analysis of the existing barriers in these areas will inform our concrete proposals, for instance the revision of the TEN-E regulation by the end of 2020 or the revision of the energy taxation directive and the gas market regulatory framework in 2021.
Hydrogen strategy
In an integrated energy system, hydrogen can support the decarbonisation of industry, transport, power generation and buildings across Europe. The EU Hydrogen Strategy addresses how to transform this potential into reality, through investments, regulation, market creation and research and innovation.
Hydrogen can power sectors that are not suitable for electrification and provide storage to balance variable renewable energy flows, but this can only be achieved with coordinated action between the public and private sector, at EU level. The priority is to develop renewable hydrogen, produced using mainly wind and solar energy. However, in the short and medium term other forms of low-carbon hydrogen are needed to rapidly reduce emissions and support the development of a viable market.
This gradual transition will require a phased approach:
From 2020 to 2024, we will support the installation of at least 6 gigawatts of renewable hydrogen electrolysers in the EU, and the production of up to one million tonnes of renewable hydrogen.
From 2025 to 2030, hydrogen needs to become an intrinsic part of our integrated energy system, with at least 40 gigawatts of renewable hydrogen electrolysers and the production of up to ten million tonnes of renewable hydrogen in the EU.
From 2030 to 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale across all hard-to-decarbonise sectors.
To help deliver on this Strategy, the Commission is launching today the European Clean Hydrogen Alliance with industry leaders, civil society, national and regional ministers and the European Investment Bank. The Alliance will build up an investment pipeline for scaled-up production and will support demand for clean hydrogen in the EU.
To target support at the cleanest available technologies, the Commission will work to introduce common standards, terminology and certification, based on life-cycle carbon emissions, anchored in existing climate and energy legislation, and in line with the EU taxonomy for sustainable investments. The Commission will propose policy and regulatory measures to create investor certainty, facilitate the uptake of hydrogen, promote the necessary infrastructure and logistical networks, adapt infrastructure planning tools, and support investments, in particular through the Next Generation EU recovery plan.
Quotes from members of the College of Commissioners
Executive Vice-President for the Green Deal, Frans Timmermans, said: “The strategies adopted today will bolster the European Green Deal and the green recovery, and put us firmly on the path of decarbonising our economy by 2050. The new hydrogen economy can be a growth engine to help overcome the economic damage caused by COVID-19. In developing and deploying a clean hydrogen value chain, Europe will become a global frontrunner and retain its leadership in clean tech.”  
Commissioner for Energy Kadri Simson, said: “With 75% of the EU’s greenhouse gas emissions coming from energy, we need a paradigm shift to reach our 2030 and 2050 targets. The EU’s energy system has to become better integrated, more flexible and able to accommodate the cleanest and most cost-effective solutions. Hydrogen will play a key role in this, as falling renewable energy prices and continuous innovation make it a viable solution for a climate-neutral economy.”
Commissioner for Internal Market, Thierry Breton, said: “The European Clean Hydrogen Alliance launched today will channel investments into hydrogen production. It will develop a pipeline of concrete projects to support the decarbonisation efforts of European energy intensive industries such as steel and chemicals. The Alliance is strategically important for our Green Deal ambitions and the resilience of our industry.” 
Background
The European Green Deal is the new growth strategy of the EU, a roadmap to make our economy sustainable by turning climate and environmental challenges into opportunities across all policy areas and making the transition just and inclusive for all. A better-integrated energy system is essential in order to move to climate neutrality by 2050, while also creating jobs, ensuring a fair transition and strengthening innovation in the EU and industrial leadership at a global level. The sector can make a key contribution to Europe’s economic recovery from the coronavirus crisis, as outlined in the Next Generation EU recovery package presented by the Commission on 27 May 2020.
Today’s energy system is still built on several parallel, vertical energy value chains, which rigidly link specific energy resources with specific end-use sectors, wasting a significant amount of energy. For instance, petroleum products are predominant in the transport sector and as feedstock for industry. Coal and natural gas are mainly used to produce electricity and heating. Electricity and gas networks are planned and managed independently from each other. Market rules are also largely specific to different sectors. This model of separate silos cannot deliver a climate neutral economy. It is technically and economically inefficient, and leads to substantial losses in the form of waste heat and low energy efficiency.
One way to deliver sector integration is by deploying renewable hydrogen. It can be used as a feedstock, a fuel or an energy carrier and storage, and has many possible applications across industry, transport, power and buildings sectors. Most importantly, it emits no CO2 and almost no air pollution when used. It therefore offers a solution to decarbonise industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve. All this makes hydrogen essential to support the EU’s commitment to reach carbon neutrality by 2050 and for the global effort to implement the Paris Agreement.
For More Information
Proposal on EU Energy System Integration Strategy
Proposal on EU Hydrogen Strategy
Question and Answers on EU Energy System Integration Strategy
Question and Answers on EU Hydrogen Strategy
Factsheet on EU Energy System Integration Strategy
Factsheet on EU Hydrogen Strategy
Factsheet on European Clean Hydrogen Alliance
Video on EU Energy System Integration
Video on EU Hydrogen Strategy
European Clean Hydrogen Alliance launch
Compliments of the European Commission.

Together with our members we are creating a Video series of first-hand accounts of the Pandemic’s impact, both personally & professionally.

We invite you to join us today for a first-hand look at the impact of the global shutdown following the Coronavirus (COVID-19) outbreak – Today we are featuring James S. York, Director of US Business & Innovation, Enterprise Estonia a Member of the EACCNY.
The questions we asked our members for this series are:1) What are some challenges you, personally and your organization have faced?2) What are some of the most surprising (positive, innovative) responses/changes you have witnessed?3) How will this experience change us going forward, as a society and in terms of how we do business?

EACCNY has its finger on the pulse of how this worldwide pandemic is effecting companies and organizations on both sides of the Atlantic. EACC is where Americans & Europeans connect to do business.
Stay tuned for more on this series! We hope you enjoy these short vignettes our members and friends of the EACC created to share their experience.

Today, the European Commission published its latest report on the Commission’s system to prevent or restrict the selling of dangerous products on the market, the so-called ‘Rapid Alert System‘. The report shows that the number of actions taken by authorities following an alert is growing year on year, reaching 4,477 in 2019 compared to 4050 in 2018.
Didier Reynders, Commissioner for Justice, said: “The Rapid Alert System is available 24 hours, 7 days a week, keeping information flowing and our single market safe. As we have seen from the 2019 report, a record level of work is being carried out to protect consumers from dangerous products and potential harm. Moreover, the Commission has been working with Member States to increase testing of products. This work led to an additional 75 products being flagged through our Rapid Alert System since the end of last year.
Main findings of the report
In 2019, authorities from 31 participating countries of the Rapid Alert System (EU Member States plus the UK, Norway, Iceland and Liechtenstein) exchanged 2,243 alerts on dangerous products through the system, which prompted 4,477 follow-up actions. This represents an increase of 10% from last year and of 63% since 2015. Actions taken range from the withdrawal or destruction of a product by distributors and retailers before they reach consumers, to recalling unsafe products from users.
According to today’s report, toys were the most notified product category (29% of total notifications), followed by motor vehicles (23%), and electrical appliances and equipment (8%). Cosmetics, clothing, textiles and fashion items, as well as childcare articles and children’s equipment also had a high number of alerts.
The most notified risks related to a product causing injuries (27%) such as fractures or concussions. Chemical components in products was the second most frequently flagged concern (23%), followed by risks of choking for children (13%).
While not covered by the 2019 report, a number of new alerts have been registered since the start of the coronavirus outbreak. Up until 1 July, there were 63 alerts on face masks, 3 alerts on coveralls, 3 alerts on hand disinfectants and 3 alerts on UV lamps (“sanitising wands”). Between 1 March and 1 July, 10 follow-up actions were taken on face-masks, and one on a hand disinfectant, leading to the further harmonisation of measures against such products and thereby improving the protection of consumers across Europe.
Coordinated testing of products
The Commission also published today the results of the Coordinated Activities on the Safety of Products (CASP). This work – which involved the joint testing of products by the European Commission and European authorities selected by the Member States– led to 652 products being tested for safety. Products selected for testing by Member States included personal transport devices, soft-filled toys, chargers, batteries, bicycle seats for children and slime toys. 38% of all products tested were non-compliant with specific aspects of EU safety legislation. 11% of products – 75 products – were found to pose serious risks for consumers. For example, while all the bicycle seats tested presented some type of risk, only 8% were serious. By category, soft-filled toys presented the highest rates of serious risks, 68%, while batteries showed the least serious risks (1%) In carrying out this work, if a risk is found to be serious, the product is notified in the Rapid Alert System in order to prevent the spread of dangerous products on the market.
Next steps
The Commission will continue modernising the Rapid Alert System tools to encourage consumers to consult the database of alerts and make safe purchasing decisions. This includes updating the website for consumers and businesses, as well as the specific tool used by Member States to notify alerts.
The Coordinated Activities on the Safety of Products are organised every year. This year’s activities – CASP2020 – started at the beginning of the year. They include testing products (such as toys, jewellery, home play outdoor equipment, cables, small kitchen heating appliances, baby nests and children’s car seats), risk assessment, online market surveillance, cooperation with customs, injury and accident data collection and communication campaigns. In the coronavirus context, the Commission is also launching a specific call for products related to the virus. The joint work – which will be similar to the work carried out for non-coronavirus-related products, will cover half-face masks, hand disinfectants and gloves, and is expected to start before mid-July 2020. The priorities for CASP2021 are currently being established.
Background
Since 2003, the Rapid Alert System ensures that information about dangerous non-food products withdrawn from the market and/or recalled anywhere in Europe is quickly circulated between Member States and the European Commission. This way, appropriate follow-up action can be taken everywhere in the EU.
The Rapid Alert System has a dedicated public website ‘the Safety Gate’ which provides access to weekly updates of alerts submitted by the national authorities participating in the system. Thanks to the modernisation of the system, specific alerts can be prioritised and processed immediately at arrival, such as alerts on unsafe facemasks in April 2020.
Businesses also can use the Business Gateway to quickly and efficiently warn national authorities about a product that they have put on the market that might be unsafe.
Another action on consumer protection is the Product Safety Pledge, which sets out specific voluntary actions that go beyond what is already established in the EU legislation. Seven online marketplaces have already signed this agreement to cooperate with Member States to remove dangerous products from their websites. The company Wish.com has recently joined the initiative.
For More Information
Annual report and factsheet with national statistics on Safety Gate
Rapid Alert System alerts listings
Search tool for the Rapid Alert System published information
Rapid Alert System national contact points
Business Gateway
Business Gateway national contact points
CASP 2019 Results
Compliments of the European Commission.

The EU economy will experience a deep recession this year due to the coronavirus pandemic, despite the swift and comprehensive policy response at both EU and national levels. Because the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring Forecast, the impact on economic activity in 2020 will be more significant than anticipated.
The Summer 2020 Economic Forecast projects that the euro area economy will contract by 8.7% in 2020 and grow by 6.1% in 2021. The EU economy is forecast to contract by 8.3% in 2020 and grow by 5.8% in 2021. The contraction in 2020 is, therefore, projected to be significantly greater than the 7.7% projected for the euro area and 7.4% for the EU as a whole in the Spring Forecast. Growth in 2021 will also be slightly less robust than projected in the spring.
Valdis Dombrovskis, Executive Vice-President for an Economy that works for People, said: “The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections. If anything, this forecast is a powerful illustration of why we need a deal on our ambitious recovery package, NextGenerationEU, to help the economy. Looking forward to this year and next, we can expect a rebound but we will need to be vigilant about the differing pace of the recovery. We need to continue protecting workers and companies and coordinate our policies closely at EU level to ensure we emerge stronger and united.”
Paolo Gentiloni, Commissioner for the Economy, said: “Coronavirus has now claimed the lives of more than half a million people worldwide, a number still rising by the day – in some parts of the world at an alarming rate. And this forecast shows the devastating economic effects of that pandemic. The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity. This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time.”
Recovery expected to gain traction in second half of 2020
The impact of the pandemic on economic activity was already considerable in the first quarter of 2020, even though most Member States only began introducing lockdown measures in mid-March. With a far longer period of disruption and lockdown taking place in the second quarter of 2020, economic output is expected to have contracted significantly more than in the first quarter.
However, early data for May and June suggest that the worst may have passed. The recovery is expected to gain traction in the second half of the year, albeit remaining incomplete and uneven across Member States.
The shock to the EU economy is symmetric in that the pandemic has hit all Member States. However, both the drop in output in 2020 and the strength of the rebound in 2021 are set to differ markedly. The differences in the scale of the impact of the pandemic and the strength of recoveries across Member States are now forecast to be still more pronounced than expected in the Spring Forecast.
An unchanged outlook for inflation
The overall outlook for inflation has changed little since the Spring Forecast, although there have been significant changes to the underlying forces driving prices.
While oil and food prices have risen more than expected, their effect is expected to be balanced by the weaker economic outlook and the effect of VAT reductions and other measures taken in some Member States.
Inflation in the euro area, as measured by the Harmonised Index of Consumer Prices (HICP), is now forecast at 0.3% in 2020 and 1.1% in 2021. For the EU, inflation is forecast at 0.6% in 2020 and 1.3% in 2021.
Exceptionally high risks
The risks to the forecast are exceptionally high and mainly to the downside.
The scale and duration of the pandemic, and of possibly necessary future lockdown measures, remain essentially unknown. The forecast assumes that lockdown measures will continue to ease and there will not be a ‘second wave’ of infections. There are considerable risks that the labour market could suffer more long-term scars than expected and that liquidity difficulties could turn into solvency problems for many companies. There are risks to the stability of financial markets and a danger that Member States may fail to sufficiently coordinate national policy responses. A failure to secure an agreement on the future trading relationship between the UK and the EU could also result in lower growth, particularly for the UK. More broadly, protectionist policies and an excessive turning away from global production chains could also negatively affect trade and the global economy.
There are also upside risks, such as an early availability of a vaccine against the coronavirus.
The Commission’s proposal for a recovery plan, centred on a new instrument, NextGenerationEU, is not factored into this forecast since it has yet to be agreed. An agreement on the Commission’s proposal is therefore also considered an upside risk.
More generally, a swifter-than-expected rebound cannot be excluded, particularly if the epidemiological situation allows a faster lifting of remaining restrictions than assumed.
For the UK, a purely technical assumption
Given that the future relations between the EU and the UK are not yet clear, projections for 2021 are based on a purely technical assumption of status quo in terms of their trading relations. This is for forecasting purposes only and reflects no anticipation nor prediction as regards the outcome of the negotiations between the EU and the UK on their future relationship.
Background
This forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 26 June. For all other incoming data, including assumptions about government policies, this forecast takes into consideration information up until and including 30 June. Unless policies are credibly announced and specified in adequate detail, the projections assume no policy changes.
The European Commission publishes two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year. The interim forecasts cover annual and quarterly GDP and inflation for the current and following year for all Member States, as well as EU and euro area aggregates.
The European Commission’s next economic forecast will be the Autumn 2020 Economic Forecast which is scheduled to be published in November 2020.
For More Information
Summer 2020 Economic Forecast
Compliments of the European Commission.

Speech by President Charles Michel |
First of all, I would like to thank you for inviting me to speak at this 20th edition of your economic forum.
This year, by way of exception, the forum will be conducted virtually. And it is the exceptional nature of this COVID-19 crisis that I wish to address first, setting the context for the action we are endeavouring to take at EU level.
It is a simple yet astonishing fact: leaders throughout the world – regardless of their political orientations – have implemented extraordinary measures restricting freedoms. Economies have virtually ground to a halt. And for what reason? To protect people’s lives and health. And as a former prime minister confronted with terrorist attacks, I can assure you that a decision to set aside or suspend fundamental personal freedoms is undoubtedly one of the most serious it is possible to take.
And the economic impact is also substantial: the European Commission is forecasting a 7.5 % drop in the EU’s gross domestic product this year. And we know it will take several years to return to the pre-crisis level.
It is only natural that, ever since the first few days of the crisis, the political agenda has been driven by the health emergency and by the desire to save lives and to slow down and stop the virus. And we all very quickly realised what serious consequences the pandemic would have for the global economy.
At the forefront of efforts in this regard, the national governments have discharged their responsibilities in full, taking exceptional steps to support both workers and businesses. And this has been made possible by the decisive action taken by the European Union. As you know, ever since March, the European Central Bank has taken crucial decisions to provide liquidity support amounting to over EUR 870 billion, topped up by an additional EUR 600 billion in June.
In parallel to that, following the first video conference of the European Council on 10 March, we decided to relax the rules governing state aid and suspended the Stability Pact by activating the general escape clause, measures unthinkable just a few weeks previously. This enabled national measures to be taken which were unprecedented in terms of their scope and speed. Among the EU‑27, budgetary support has amounted to almost EUR 520 billion, representing almost 4 % of the EU’s GDP, while the liquidity support has amounted to over 23 % of that same GDP. For France, for example, the fiscal effort represents 6 %. The decisive nature of these measures was summed up in the words of French President Emmanuel Macron: ‘To do whatever is necessary, whatever the cost’.
If we have acted so forcefully and so quickly, it is because we have learnt the lessons of the financial crisis, in particular regarding the knock-on effects of a crisis and its dramatic and often long-lasting consequences for economic stakeholders. These are the hysteresis effects so familiar to economists. These effects are tangible: individuals who go through a long period of unemployment lose their skills, and businesses disappear along with their know-how. If we do nothing, we risk obstructing future growth. We wanted to break this vicious cycle without delay.
Next, it is clear that not all European countries have the same capacity to deal with the economic effects of this crisis. Without a joint European effort, there was a danger that economic divergence would have further deepened, jeopardising the level playing field and exacerbating disparities in the internal market. I was convinced, and I remain entirely convinced that a European recovery based on solidarity, requiring unprecedented financial resources, was and is essential, without ever losing sight of the purpose of this effort: greater convergence and resilience in our Union. Because economic or fiscal vulnerabilities of Member States are of course a risk to each of those states, but they also represent a serious risk to the whole system, in an integrated internal market with a single currency.
It is true that the European system of economic and fiscal governance, set up in the wake of the debt crisis, was intended to strengthen our economies and the fiscal capacity of our member states. Throughout my term as Prime Minister of Belgium, I could see how challenging it was to implement the structural reforms needed to achieve prosperity, how we encountered headwinds and obstacles along the way. And the European instruments which were put in place in the past, combined with national reforms, certainly allowed us to react more quickly and more effectively.
I learnt a lesson from that experience: growth in itself is not automatically virtuous. Inequalities, iniquities and disparities not only create legitimate frustrations but also represent obstacles in the path to prosperity.
Even before the pandemic, the European Union had laid the foundations for tackling these problems. In particular, in 2017 we adopted the Pillar of Social Rights, which I believe we should implement further. Reducing inequalities also improves economic resilience.
I am convinced about another point too. More than ever, we need this double project of major transformation for Europe: climate neutrality by 2050 – our Green Deal – and the digital transition, destined to put Europe at the forefront of using data, the natural resource of the digital world.
I’ll focus for a moment on the climate transition – which of course represents an existential challenge for humanity. It is no longer a question of choice, it is beyond doubt and is a necessity. And this absolute necessity is not at odds with economic development. It even represents, in my view, a powerful lever for prosperity, if we make the right choices. That means transforming – in an unprecedented way – our social market economies, to make a paradigm shift in order to protect natural resources and radically increase the circular nature of our economy. The decision made late last year to integrate the United Nations sustainable development goals into the European Semester, our economic governance mechanism, is part of precisely this same logic.
These transformations were in fact started before the crisis, and the pandemic has resoundingly shown just how interdependent our economic, social and environmental systems are. They are not parallel worlds. We must deal with them together, that is the only way to move towards robust resilience. There will undoubtedly be other shocks to come. We have to be better prepared, it is a duty for Europe, it is even a duty for humanity.
Resilience is in fact at the heart of the ongoing negotiations on the EU’s multiannual budget and the exceptional recovery fund financed by Union borrowing. Interestingly, the focus of the debate has gradually shifted from the issue of borrowing and the balance of grants and loans, to the issue of where these amounts will go and how they will be spent.
There is, in my view, one other fundamental lesson to be drawn from this extraordinary crisis. While the financial crisis pushed us to put consolidating fragile public finances at the top of our agenda, this crisis has brought home what’s most important: personal and collective well-being, embodied by a compassionate and caring society which, I believe, should be Europe’s new horizon.
Perhaps it is time we agreed on new measures that are better able to reflect a society’s performance in terms of prosperity and well-being. And this reopens a debate that’s not new for you economists, on the nature of growth and the fact that it can’t be reduced to value creation. The discussion launched in the context of the OECD by Joseph Stiglitz, Jean-Paul Fitoussi and Martine Durand with their report “Beyond GDP” is a source of inspiration for me. Allow me to quote that report: “the use of indicators reflecting what we value as a society would have led, most likely, to stronger GDP growth than that actually achieved by most countries after 2008.”
This leads me to the final dimension of this matter, and perhaps the most important: the democratic dimension. The climate and digital transitions are a positive, unifying, extraordinary project. But we will not win citizens’ support by using this growth indicator, which does not reflect the progress people feel in their daily lives, as the only measure. Quality of the environment and of education, access to healthcare, equal opportunities – in short, quality of life – must, now more than ever, be at the heart of our ambition.
Going beyond GDP – this is an issue, perhaps even an existential challenge, for the future of our liberal democracies. The forthcoming conference on the future of Europe, which will, I hope, involve European citizens directly, must be the democratic opportunity to conduct this debate with full transparency, with vigour and with passion. A debate that starts out about economics, but that in the end is much broader, and that propels us towards a common future.
Thank you for your attention, and I wish you lively and fruitful discussions.
Compliments of the European Council.

ECB supportive of banks’ European Payments Initiative
Pan-European card and digital wallet to complete European retail payments market
The European Central Bank (ECB) welcomes the decision by 16 European banks to launch the European Payments Initiative. This initiative aims to create a unified payment solution for consumers and merchants across Europe, encompassing a payment card and a digital wallet and covering in-store, online and person-to-person payments as well as cash withdrawals.
In recent years, significant progress has been made towards a safe, efficient and integrated European payments market with the introduction of pan-European infrastructures under the Single Euro Payments Area (SEPA). Nevertheless, fragmentation persists in the way people actually pay, be it online or on-site in brick and mortar shops.
Ten European countries still have national card schemes that do not accept cards from other EU Member States. There is also a growing number of innovative services, such as mobile wallets, that are only offered at the national level. The current situation has attracted initiatives from global players that aim to overcome the shortcomings of cross-border retail payments by building a new separate payments ecosystem. In November 2019 the Eurosystem relaunched its retail payments strategy, calling for increased collaboration between European stakeholders to provide payment services that meet the needs of European customers and strengthen the autonomy of the European retail payments market.
The European Payments Initiative is a response to this call. It seeks to replace national schemes for card, online and mobile payments with a unified card and digital wallet that can be used across Europe, thereby doing away with the existing fragmentation. As it is based on the SEPA instant credit transfer (SCT Inst) scheme, it can immediately capitalise on powerful and sophisticated existing infrastructures, such as the Eurosystem’s TARGET Instant Payment Settlement (TIPS).
“The European Payments Initiative will have to tackle the fragmentation in European retail payments and should encompass all euro area countries, and eventually the entire European Union”, said ECB Executive Board member Fabio Panetta. “The foreseen effective implementation and a growing number of participants have the potential to strengthen the role of European providers.”
The Eurosystem will continue to support private initiatives for retail payments provided that they fulfil five key objectives: pan-European reach, customer friendliness, cost efficiency, safety and security, European identity and governance, and, in the long-run, global reach.
Compliments of the European Central Bank.