Can a Modern-Day Marshall Plan Rescue Europe’s Economy?

Thomas O. Falk

EU Commission President Ursula von der Leyen has called for a determined and united European approach to cushion the coronavirus pandemic’s consequences. “In this crisis, halve measures are insufficient,” she wrote in an essay that appeared on Sunday in a major German newspaper. The latter also needed to be applied in the coming years, in which it was even more critical to maneuver the European economy well out of the crisis. For this, the EU needed massive investments, a “Marshall Plan for Europe,” von der Leyen concludes.

The upcoming EU financial framework would play a central role in the facilitation of her vision. Von der Leyen writes that Europe was initially caught off guard by an unknown enemy, and a crisis of unprecedented scale and pace. Since then, however, a wave of compassion and helpfulness had swept through the entire Union. Doctors and nurses had returned from retirement, while millions of volunteers were helping wherever they are needed. Restaurants provided exhausted nursing staff with food, designers were making hospital masks, and automakers worked on ventilators. This solidarity was admirable – and it was “the heart of the European Union.” All of these examples showed that the real Europe was “back”, von der Leyen writes.

She continuous by explaining that measures were currently being taken at the European level that had been previously unthinkable. The aid targets were now more flexible than ever before. Accordingly, companies – from large corporations to small businesses – would get the support they need as quickly as possible. In addition, the EU had loosened its budget rules more than ever. Finally, grants from the Member States and the EU would now flow quickly to where they are needed.

In total, the EU institutions and the member states were able to mobilize €2.8 trillion to fight the crisis, which von der Leyen describes as “the strongest response to the economic downturn caused by Corona worldwide”.

This week, the European Union was taking even another step. For once, a new program called SURE had been proposed to ensure that people in the crisis kept their jobs and livelihoods. The aim was to ensure that companies across Europe survive this difficult phase. The program thus aimed to provide € 100 billion so that governments can compensate for the loss of income if companies had to envoke furlough or, in case self-employed individuals had lost income, von der Leyen continues.

The priorities in the next EU multiannual financial framework would play a crucial role in how EU countries can overcome the consequences of the crisis. President von der Leyen continues that the world had changed. Thus the EU’s household would be tailored to satisfy these new requirements.

The next few years would decide how well and how quickly one could revitalize the respective European economies weakened by the current crisis and thus get the unique internal market going again. “The many billions that have to be invested today to avert a major catastrophe will bind generations. That is why we have a duty to invest the money from our next budget in a particularly smart and sustainable way. It must help preserve what is dear to us and renew the community’s feeling among the nations of Europe. And it has to be a strategic investment in our future. This includes, for example, innovative research, digital infrastructure, clean energy, an intelligent circular economy, and future-proof transport systems,” von der Leyen urges.

Such a Marshall Plan could make a decisive contribution to building a “more modern, sustainable and resilient” Europe. Moreover, it could lead to the European Union emerging even stronger from the current situation – as the Union had already shown several times in its history, von der Leyen concludes. Only time will tell.