Across Europe, the message is the same 'Stay at home', but how can European economies recover?
- The COVID-19 crisis could see Eurozone GDP shrink by 7%.
- EU institutions and member states have put up $3 trillion to fight the crisis.
- Can a plan similar to one used 70 years ago help the continent’s economies survive?
In the midst of the COVID-19 crisis, the European Union is looking at how it can rebuild the continent’s economies in the years after the pandemic – and it says a plan implemented in the aftermath of World War II could provide a model to follow.
“In this crisis, there can be no half-measures,” the president of the European Commission, Ursula von der Leyen, said. “And that will be the case for years to come as we seek to lift our economy out of the crisis valley. To do this, we will need massive investment in the form of a Marshall Plan for Europe. And at the heart of it should lie a powerful new EU budget.”
According to the Economist Intelligence Unit, the global economy will shrink by 2.5% in 2020 as a result of the pandemic. While in Europe, the effects could be even more severe – a drop in Eurozone GDP of up to 7% has been predicted.
Von der Leyen’s calls for a new Marshall Plan to help those of the continent’s economies that have been hit hardest by the coronavirus were echoed by the Spanish prime minister, Pedro Sanchez, who said: “If the virus doesn’t stop at borders, then financing mechanisms cannot do so either.”
The Marshall Plan was a US initiative to help reinvigorate the economies of Europe after the end of World War II. The war to defeat the Nazis raged for six years, and led to enormous loss of life. Millions died on the battlefields, in camps, and in towns and cities. Countless roads, railways, factories and houses were destroyed, too, leaving national economies in ruins.
To get Europe back on its feet, and put an end to any potential expansion of the Soviet Union, the US Secretary of State, George C. Marshall, created the European Recovery Program. It sent nearly $13 billion of aid to Europe between 1948 and 1951, including shipments of food, fuel and machinery, as well as investments in ongoing industrial development. That would be around $142 billion today.
In a speech given at Harvard University in June 1947, Marshall said: "The truth of the matter is that Europe's requirements for the next three to four years of foreign food and other essential products – principally from America – are so much greater than her present ability to pay that she must have substantial additional help or face economic, social and political deterioration of a very grave character.”
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