Bad news for southern Europe. It looks like coronavirus will further entrench the European Union’s long-standing disparities between north and south.
According to the European Commission’s estimates, the economies of Italy, Spain, and Greece will all shrink over 9%. By comparison, the EU average is 7.4%. France will shrink 8.2%, while most Nordic/Germanic countries will shrink less than 6.5% (that’s Germany, the Sweden, Denmark, Austria, Finland).
EU unemployment expected to rise from 6.7% to to 9% this year. Unemployment will rise to 9.7% in Portugal, 10.1% in France, 11.8% in Italy, 18.9% in Spain, and 19.9% in Greece. Germany will have 4%.
Deficits are going through the roof, from 0.6% of GDP in 2019 to 8.3% this year. Debt will rise to over102% of GDP, with huge disparities: over 115% for Spain and France, and almost 160% for Italy and 200% for Greece. By contrast, Germany’s debt will rise to 75% of GDP and Great Britain’s to 102%.
In terms of jobs and debt reduction, all of the hard-won gains of the past five years or so have been annihilated.
Even before the COVID recession, southern Europe was barely on track for slowly growing out of debt. Now these hopes are completely dashed.
The economic disparities between northern and southern Europe – which have been manifest at least since the late nineteenth century and particularly since the Second World War – are going to become deeply entrenched.