Good evening. It is a year since the COVID-19 outbreak. So this was a good moment for us to discuss and take stock of the impact of the pandemic on different sectors of our economies.
This was an interesting discussion, as Paschal just said. I see a strong will from finance ministers to compare their policies and to coordinate. I think that the Eurogroup today was a good opportunity, from this point of view.
The pandemic has had disproportionate consequences on different sectors, with services hit harder than industry.
For example, compared to January 2020, turnover in transport equipment manufacturing dropped around 80% in the second quarter of last year, but is expected to be around 20% above its pre-pandemic level by the end of 2021.
On the opposite side, if we look at accommodation and food, the drop in turnover last spring was more than 80%. It is still around 70% below pre-pandemic levels now. It is expected to be barely back to pre-pandemic levels by the end of this year.
So, there are huge differences between sectors which will probably persist.
This is not something that will be solved in a few weeks.
There was, of course, an impact in the labour market and had it not been for the strong policy support, including through SURE, the increase in unemployment would certainly have been much more marked. But this danger has not passed. And that's why the withdrawal of support and the transition to more targeted measures must happen gradually and be calibrated very carefully. Otherwise, the risk of an increase in bankruptcies and of more lasting economic damage will be hard to avoid.
We fully support the statement issued tonight. I want to recognise the excellent work of Paschal Donohoe in building consensus on the statement. It is coherent with the Commission's Communication of two weeks ago and helps to provide as much predictability as is possible in these times and also reflects the existence of a consensus that fiscal policy should remain agile and effectively adjust to how the pandemic and economic situation evolves and continue to proceed hand-in-hand with monetary policy.
For next year and thereafter, our Communication presented some key principles which integrate the supportive fiscal stance for 2021. We will use these principles in May when proposing fiscal guidance for 2022.
Notably, a premature withdrawal of fiscal support should be avoided, because pulling back too quickly would be a policy mistake. There is a growing consensus in Europe and internationally on this.
Second, the best way to secure public debt sustainability is to support the recovery and thereby reduce the risk of scarring and economic divergence.
And third, erring on the side of caution in the current circumstances means to maintain fiscal support. We will not repeat the mistake of the last crisis.
On Greece, very briefly, our ninth enhanced surveillance finds that Greece has progressed very well with implementing a number of reform commitments, while noting that the reform momentum has slowed down, acknowledging the challenging circumstances caused by the pandemic.
Greece progressed well in particular in the areas of education, corporate governance, privatisation, and energy policy.
We also welcomes the adoption of the long-awaited human resources reform in the tax administration.
Looking ahead, we have agreed detailed roadmaps with the Greek authorities in relation to the new Insolvency Code, which is now scheduled to enter into force by 1 June; the management of payment arrears; the simplification of investment licensing; the adoption of a modernised Labour Code; and the justice reform.
We will continue our very good cooperation with the Greek authorities in view of the tenth enhanced surveillance report.
Finally, a few words finally on the international role of the euro, the last point we discussed this afternoon, this time at 27.
First, a stronger international role for the euro will flow naturally from a good implementation of the Recovery and Resilience Facility. The unprecedented European bond issuance to finance NextGenerationEU will add depth and liquidity to the market for highly rated euro-denominated debt securities issued by the EU.
I would also underline the importance of strengthening European cross-border payment systems. This includes joint work on the technical challenges associated with the potential introduction of a digital euro.
We should pursue the work on sustainable finance, to further enhance our status as a global hub of green finance, with the euro being the most used currency of denomination of green bonds. For instance, the three top “green exchanges” are Luxembourg, Frankfurt and Milan, all ahead of London.
And finally, we need to engage with the public and private sector as well as institutional investors in third countries to get a better understanding of the obstacles for the use of the euro in trade and financial relations. The consensus we had in the Eurogroup sends a very good message in view of the coming Euro Summit.