Le Plan de relance pour l'Europe Diaporama utilisé par André Sapir, Professeur à l'ULB et chercheur chez Bruegel, lors du webinaire qu'il a animé pour le forum financier, le 16 novembre 2020.

1. Le Plan de Relance pour l’Europe
André Sapir
Professeur, Université libre de Bruxelles
Senior Fellow, Bruegel
PPT pour présentation au
Forum Financier Belge
16 novembre 2020

2. • Les phases économiques de la pandémie
• Les mesures d’urgence
• Les mesures de relance et le plan européen
Plan de la présentation

3. • The three phases (IMF Fiscal Monitor, October 2020)
• Phase 1: widespread lockdown
• Phase 2: partial reopening
• Phase 3: post-Covid-19 recovery
• The linear view (in June) was wrong
• Planning the recovery is important…
• …but difficult economically and politically
The phases of the pandemic

4. • Emergency measures (short-term)
• Health sector measures
• Household income support
• Employment measures
• Tax measures
• Other liquidity support
• Question: loans, grants or equity participation?
• Recovery measures (medium-term)
• No need to stimulate private consumption because of private saving
• Need to boost public investment
• Need to adopt structural measures
Fiscal measures: emergency versus recovery

5. • Mainly by MS borrowing from markets
• In the Spring, the EU gave MS ‘a licence to borrow’
• ECB PEPP
• Fiscal rules
• SURE loan facility: €100bn
• ESM pandemic loan facility: €240bn
• This strategy (ECB PEPP + fiscal rules) has been very
successful: large differences in growth across MS, but not due
to their debt situation
How are emergency public expenditures financed?

6. • Top quartile (HR,ES,IE,FR,IT,PT,EL): average of -12.0%
• Two middle quartiles: average of -10.0% (including BE)
• Bottom quartile (AU,NL,PL,FI,DE,DK,SE): average of -7.5%
• Why such differences?
Large differences in growth performance in 2020
S4 - Southern Four
F4 - Frugal Four

7. • Health situation: lockdown measures
• Economic structure: tourism share in GDP
• Economic response: fiscal constraint (debt-to-GDP)?
• Economic response: governance
Possible explanations

8. Health situation Economic structure
Source: own computations
Correlation with Y: -0.60
Lockdown
-16
-14
-12
-10
-8
-6
-4
-2
0
0 10 20 30 40 50 60 70 80 90 100
IT
DE
SE
-16
-14
-12
-10
-8
-6
-4
-2
0
0 5 10 15 20 25
HR
Tourism revenue-to-GDP (%)
Correlation with Y: -0.46
DE
IT

9. Economic response
Fiscal constraint? Quality of governance
Source: own computations
Correlation: 0.46
Tourism revenue-to-GDP (%)
-16
-14
-12
-10
-8
-6
-4
-2
0
0 5 10 15 20 25
HR
DE
ELIT
-16
-14
-12
-10
-8
-6
-4
-2
0
0 20 40 60 80 100 120 140 160 180 200
DE
IT
EL
Debt-to-GDP in 2019 (%)
Correlation with Y: -0.49
-16
-14
-12
-10
-8
-6
-4
-2
0
0 2 4 6 8 10 12
IT
DE
FI
Quality of Governance (WB indicator)
Correlation with Y: 0.58

10. Multiple regression analysis
Fall in 2020 growth forecast from Feb to July 2020
=
Constant + α LOCKDOWN + β TOURISM + γ DEBT + δ GOVERNANCE + ε

11. Using the regression results to decompose differences
Governance

12. • MS are (rightly) spending generously on
emergency measures
• They will also need to spend a lot
for the recovery
• Not all EU countries will have the means
• Need to avoid austerity and a new
North/South divide – Role of Germany
Why an EU recovery plan?
Deficit Debt

13. • EUR 750 bn
• EUR 360 bn in loans => EUR 360 bn
• EUR 390 bn in grants
• EUR 312.5 bn in grants => EUR 312.5 bn
• EUR 77.5 bn in grants under other programs
• React-EU EUR 47.5 billion
• Horizon Europe EUR 5 billion
• Invest-EU EUR 5.6 billion
• Rural Development EUR 7.5 billion
• Just Transition Fund EUR 10 billion
• Resc-EU EUR 1.9 billion
New Generation EU (NGEU)
EUR 672.5 bn
Recovery
and
Resilience
Facility (RRF)

14. • Coherent package of reforms and public investment projects
• Must address the country-specific recommendations
• Must contribute to the 4 overall objectives
• Environmental sustainability
• Productivity
• Fairness
• Macroeconomic stability
• Must meet the following targets
• At least 37% for green investment and reforms
• At least 20% for digital investment and reforms
• Plans subject to Commission assessment and Council approval
• Spending subject to Commission assessment
To get RRF money, MS must prepare national RR plans

15. • Countries started to submit draft RR plans in October 2020
• Countries must submit final RR plans by April 2021
• Com has 2 months to assess and Council 1 month to approve
• All NGEU commitments must be made before 31/12/2023
• All NGEU disbursements must be made before
• 31/12/2025 for loans
• 31/12/2026 for grants
Timetable

16. • For RRF grants, based on 3 criteria
• First criterion: share of EU population
• Second criterion: per capita GNI
• Third criterion
• For 70% of RRF grants: unemployment rate during 2015-19
• For 30% of RRF grants: loss in real GDP in 2020 and 2021
• For loans
• Must not exceed 6.8% of each MS GNI (based on 2018 GNI)
How is the money allocated among MS?

17. Payments from NGEU grants
(€billion and % GNI)
2021 2022 2023 2024 2025 2026
Austria 0.09% 0.13% 0.23% 0.25% 0.15% 0.10%
Belgium 0.13% 0.19% 0.31% 0.33% 0.21% 0.15%
Bulgaria 1.35% 1.64% 2.73% 2.91% 1.68% 0.92%
Croatia 1.35% 1.70% 3.04% 3.28% 1.91% 1.13%
Cyprus 0.60% 0.79% 1.34% 1.48% 0.82% 0.48%
Czechia 0.50% 0.61% 1.00% 1.08% 0.61% 0.33%
Denmark 0.06% 0.09% 0.15% 0.16% 0.09% 0.06%
Estonia 0.59% 0.75% 1.19% 1.27% 0.72% 0.39%
Finland 0.13% 0.18% 0.30% 0.32% 0.20% 0.13%
France 0.18% 0.24% 0.43% 0.47% 0.28% 0.18%
Germany 0.08% 0.11% 0.19% 0.20% 0.12% 0.08%
Greece 1.16% 1.54% 2.68% 2.98% 1.68% 1.02%
Hungary 0.56% 0.74% 1.27% 1.38% 0.76% 0.45%
Ireland 0.06% 0.10% 0.15% 0.16% 0.09% 0.07%
Italy 0.46% 0.66% 1.17% 1.35% 0.72% 0.45%
Latvia 0.78% 1.00% 1.72% 1.87% 1.06% 0.61%
Lithuania 0.65% 0.85% 1.46% 1.61% 0.90% 0.49%
Luxembourg 0.05% 0.12% 0.17% 0.20% 0.07% 0.04%
Malta 0.26% 0.42% 0.68% 0.78% 0.32% 0.16%
Netherlands 0.09% 0.13% 0.21% 0.22% 0.14% 0.09%
Poland 0.61% 0.76% 1.27% 1.37% 0.79% 0.43%
Portugal 0.74% 0.96% 1.74% 1.93% 1.13% 0.69%
Romania 0.83% 1.03% 1.73% 1.84% 1.05% 0.57%
Slovakia 0.79% 0.99% 1.72% 1.88% 1.08% 0.63%
Slovenia 0.45% 0.62% 1.03% 1.13% 0.62% 0.35%
Spain 0.62% 0.85% 1.48% 1.66% 0.89% 0.53%
Sweden 0.09% 0.12% 0.21% 0.23% 0.14% 0.09%
EU27 0.28% 0.38% 0.66% 0.74% 0.42% 0.26%
Source: Darvas (Nov 2020)
2021-26

18. Payments from NGEU loans
(€billion and % GNI)
2021 2022 2023 2024 2025
Austria --- --- --- --- ---
Belgium 0.95% 1.68% 1.48% 1.29% 0.56%
Bulgaria 0.96% 1.68% 1.44% 1.23% 0.52%
Croatia 0.95% 1.68% 1.44% 1.22% 0.52%
Cyprus 0.96% 1.71% 1.48% 1.27% 0.55%
Czechia 0.99% 1.71% 1.47% 1.26% 0.54%
Denmark --- --- --- --- ---
Estonia --- --- --- --- ---
Finland --- --- --- --- ---
France --- --- --- --- ---
Germany --- --- --- --- ---
Greece 0.97% 1.72% 1.48% 1.28% 0.56%
Hungary 0.97% 1.67% 1.42% 1.20% 0.51%
Ireland --- --- --- --- ---
Italy 0.97% 1.72% 1.52% 1.34% 0.59%
Latvia 0.95% 1.68% 1.43% 1.22% 0.52%
Lithuania 0.96% 1.68% 1.45% 1.25% 0.54%
Luxembourg --- --- --- --- ---
Malta 0.97% 1.65% 1.41% 1.20% 0.50%
Netherlands --- --- --- --- ---
Poland 0.97% 1.69% 1.45% 1.24% 0.53%
Portugal 0.95% 1.68% 1.46% 1.27% 0.55%
Romania 0.96% 1.66% 1.41% 1.19% 0.50%
Slovakia 0.96% 1.68% 1.44% 1.24% 0.53%
Slovenia 0.95% 1.69% 1.47% 1.26% 0.54%
Spain 0.95% 1.67% 1.45% 1.25% 0.54%
Sweden --- --- --- --- ---
EU27 0.36% 0.64% 0.56% 0.49% 0.21%
Source: Darvas (Nov 2020)
2021-25

19. • The amounts involved are not trivial, especially for some MS
=> strong redistribution
Grants Loans Grants & loans
• S4/EU27 49% 63% 56%
• DE+FR/EU27 18% 0% 10%
• F4/EU27 5% 0% 3%
• A Hamiltonian moment?
• Not quite but a very important moment nonetheless
• Supply side: Commission is issuing bonds for EUR 100 bn (SURE) +
750 bn (NGEU), with much success
• Demand side: big interest of MS for Commission vs. ESM instruments
How important is really the EU recovery plan?

20. • In the short term
• Design of the national RR plans
• Role of governance
• Assessment by the Commission
• In the medium term
• Making the recovery plan a success
• How to finance the reimbursement? Meanwhile the own resource
ceiling has been increased by 0.6 percentage points.
• Will the new facility be temporary or become permanent?
Main challenges ahead