Open AccessThe European Union’s Recovery Plan: A Critical Evaluation
Author(s) -
Gregory Papanikos
Publication year - 2021
Publication title -
athens journal of mediterranean studies
Language(s) - English
Resource type - Journals
ISSN - 2407-9480
DOI - 10.30958/ajms.7-2-1
Subject(s) - european union , stylized fact , summit , economic recovery , gross domestic product , per capita , pandemic , convergence (economics) , european commission , covid-19 , political science , development economics , economics , economic policy , economic growth , geography , medicine , macroeconomics , environmental health , infectious disease (medical specialty) , population , disease , pathology , physical geography
This article reviews the European Union’s Recovery Plan to cope with COVID-19 by examining two of its main hypotheses. I primarily use Greece as a case study of those who benefit from receiving funds, and in some cases Germany, because it played, and still plays, an instrumental role in promoting this unfounded idea of transferring European taxpayers’ money to the hands of national politicians. First, it was alleged that the health situation is improving. Second, the pandemic increases economic divergence between member states. The stylized facts so far do not seem to support either hypothesis. Since the July Summit of the European Council, the epidemiological situation has worsened as measured by deaths and cases. Data on per capita Gross Domestic Product released by the European Commission on 6 May 2020 show an unprecedented for peace years decline in economic growth rates for all 27 member states in 2020. The data estimations also assume a V-shaped recovery for 2021. However, the alleged hypothesis of economic divergence in 2020 and economic convergence in 2021 is not supported by the data themselves. The main conclusion of this study is that the economic impact cannot be fully ascertained if the pandemic is not permanently over and therefore the titanic EU spending of 750 billion euro cannot be based on the stylized economic and epidemiological facts. Keywords: European Union, pandemic, Covid-19, health, growth, public pending, recovery plan, Germany, Greece.