As the EU enters the third year of the COVID-19 pandemic, the future macroeconomic outlook remains unusually uncertain due to the emergence of new variants. A strong economic recovery was reported in 2021 (5% on average), which is expected to continue in 2022 but at a slightly slower pace (4% on average). The fiscal stance in most countries remained very supportive throughout 2021, as governments continued with large-scale measures to support the economy. In the 25 countries covered by this European Fiscal Monitor (EFM), policy measures cost on average about 5% of GDP in 2020 and 4% of GDP in 2021.
As vaccines are rolled out and restrictions relaxed, European economies are recovering from the Covid-19 pandemic. Nevertheless, most recent projections for 2021 are less optimistic than earlier estimates, given the further intense disruption caused by Covid-19 early this year. Both the projected real GDP growth and public balances were revised downwards by on average 1 percentage point.
Twelve months after the start of the first Covid-19 lockdowns, European economies remain severely affected. This EFM gives an overview of the activities of 32 IFIs, and fiscal measures adopted in 26 EU member states and the UK. The monitor is based on a survey among EU IFIs conducted in January and February 2021, and is largely based on information in autumn 2020 government budgets.
This issue of the European Fiscal Monitor gives an overview of the activities of EU IFIs and fiscal measures adopted in the 24 EU member states and the UK up to September 2020.