Three ways COVID-19 will cause economic divergence in Europe

This latest report from UK think tank the Centre for European Reform looks at the widening gap in Europe due to Covid-19.

The COVID-19 crisis is threatening to widen the gap between the European Union’s heavily indebted southern countries and the more prosperous northern member-states. The Franco-German proposal for a €500 billion recovery fund has potential, but if reluctant Northern and Central European member-states balk at sizeable transfers to Southern Europe, the virus will create fertile ground for more extreme and destabilising politics. That’s the key conclusion in a new Centre for European Reform research paper, ‘Three ways COVID-19 will cause economic divergence in Europe’, which takes an in-depth look at the dynamics of this dangerous trend and recommends policies to address it. Although the whole of the EU has been hit by the coronavirus pandemic, the economic costs of lockdowns – and the social distancing measures that follow them – are different across countries and regions. The new CER research shows how the asymmetric shock of the COVID-19 crisis is exacerbating economic divergence in three ways. First, lockdowns in southern countries with larger outbreaks, such as Italy and Spain, but also France and non-EU member the UK, will last many weeks longer than in Poland and Germany.

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