Page 14 - economic report 2020

The European labour market was also seriously
GDP GROWTH IN EMU COUNTRIES. 2020 affected by the pandemic, but less so than in
Chart 1.3 other crises, due to the support measures
Annual variation rates, as %
to protect jobs that were adopted by most
European economies (financed through
the SURE programme). For this reason, the
Eurozone unemployment rate in 2020 only
rose four tenths, to 7.9%, after achieving the
lowest unemployment rate in more than a
decade in 2019.

Inflation fell due to the dramatic decline
in consumption and oil prices.

In 2020, there was a major slowdown in
inflation due to the dramatic decline in
domestic demand and the major contraction
in oil prices. On annual average, Eurozone
inflation was 0.3%, compared with 1.2% in
Source: Eurostat. the previous year. Underlying inflation (which

Box 1.1
12 THE EU RESPONSE TO THE ECONOMIC CRISIS CAUSED BY COVID-19

The measures adopted by the European institutions bailout fund), which removes any conditions if the
to combat the effects of the pandemic can be money is used to combat the consequences of the
grouped into three blocks: those of the European health crisis.
Central Bank, those of the Eurogroup and those of
The external environment of the Andorran economy | I. The international economy
the European Commission. For its part, the European Council approved the
European recovery fund (NextGenerationEU) on 21
The European Central Bank decided, on 18 March, July 2020, endowed with €750 billion for the 2021-
to buy up to €750 billion (thousand million) of public 2026 period, the largest European funding package
debt from member states to stop the risk premiums in the history of Europe, with the goal of fostering
of the most vulnerable countries rising. On 4 July, as environmental sustainability, promoting the digital
the crisis extended, the ECB increased this amount by transformation and mitigating the economic and
€600 billion and, on 10 December 2020, by another social impact of the pandemic. The most important
€500 billion, so the total amount was €1.85 trillion part of this package is the Recovery and Resilience
(million million). This action by the ECB guaranteed Facility with a budget of €672.5 billion. Of the total,
financial stability in Europe and avoided a rise in risk €312.5 billion will be non-repayable transfers and
premiums in countries with higher levels of debt. €360 billion, loans. For the first time, the finance will
come from issuing European bonds. Moreover, from
Secondly, the Eurogroup agreed a three-pronged 1st January 2021, a new European tax on waste
liquidity package on 9 April: 1) the European from unrecycled plastic packaging will be introduced
Investment Bank (EIB) guarantee fund to finance as a source of finance for the community budget,
SMEs; 2) the SURE fund to help countries combat and the Commission is studying three new sources
unemployment, and 3) the European Stability of income: a Carbon Border Adjustment Mechanism,
Mechanism credit facility (ESM, the Eurozone’s a digital tax and an EU Emissions Trading System.