European Finance Commissioner Paolo Gentiloni has warned that the Chinese coronavirus pandemic may be hurting the economies of European Union member-states more than was previously forecast.
The European Commission has now revised its economic outlook for the summer, saying that the European Union economy as a whole could decline by around 8.3 per cent in 2020 — around one per cent more than was forecast in May.
Those countries who use the euro currency will see an even greater decline of around 8.7 per cent of GDP, down from losses of 7.7 per cent.
Previously, the Commission had also predicted that the euro currency economies would grow by 6.3 per cent in 2021. But that number has also been revised to 5.8 per cent in the report.
For the countries most affected by the pandemic, namely France, Spain, and Italy, the Commission predicted GDP decline in excess of ten per cent per country. Other EU economies are expected to fare better but still see a drop of over five per cent, such as Sweden.
Gentiloni also announced that even during the recovery, the EU would still suspend rules that member-states cannot maintain deficits of more than three per cent of GDP.
He went on to note that due to the nature of the pandemic, economic forecasts were still uncertain and could potentially become even worse if the virus sees a second wave of infections.
“The uncertainty surrounding this summer interim forecast is very high, as the scale and duration of the pandemic remain essentially unknown. There is also uncertainty regarding the duration and scope of the social distancing measures that may be needed after the relaxation of stricter containment measures in recent weeks,” the report said.
Regarding the United Kingdom leaving the EU, the report stated that no trade agreement between the EU and the British will “lead to more negative outcomes”, but claimed that “trade with the EU [for the UK] is more important than trade with the UK for the EU”.
While the EU has predicted substantial economic losses, others have been even more dire in their predictions, including Belgian economist Professor Paul De Grauwe, who warned that a lack of solidarity between member states could mean the end of the EU itself.