Why Europe’s Chances of a Strong Economic Recovery Are Slimmer than the U.S.’

The continent’s market rigidities and its lack of effective federal structures and a shared political outlook are liabilities in times of economic distress.

Even before Donald Trump’s presidency, the United States was rarely cited as a paragon of good governance. From chronic partisan polarization, gridlock, and the weakening of the legislative branch to the horrific death toll from the current coronavirus pandemic, there’s no shortage of reasons for pessimism about America.

Yet a dysfunctional federal government that can nonetheless take action in real time is preferable to no government at all. Just consider the EU’s acrimonious four-night summit in Brussels, which finally yielded agreement Tuesday morning on a modest recovery package and a budget for 2021–2028.

For all the bitter partisanship, our Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act almost unanimously in March. Since then, the U.S. economy has been propped up by that $2.2 trillion package, which included $300 billion in one-time cash payments to most Americans and $669 billion for the Paycheck Protection Program. This short-term relief has been complemented by the Fed’s injection of several trillion dollars’ worth of liquidity into the economy.

European economies, meanwhile, have until now been mostly left to cope with the economic effects of COVID-19 on their own. Many have the fiscal firepower needed to provide support to struggling businesses and to keep employees tied to their jobs, but others are not so lucky. Italy’s debt-to-GDP ratio was above 130 percent even before the crisis hit. Under the deal reached on Monday night, the EU will provide further assistance of €750 billion to such distressed countries, beginning in January of next year and financed by the issuance of common EU debt.

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Πηγή: nationalreview.com