The European Commission has released its Summer 2020 Economic Forecast which foresees an even deeper recession for this year than previous estimates. The analysis projects that the euro area economy will contract by 8,7% in 2020 and grow by 6,1% in 2021. The EU economy is forecast to contract by 8,3% in 2020 and grow by 5,8% in 2021. The contraction in 2020 is, therefore, projected to be significantly greater than the 7,7% projected for the euro area and 7,4% for the EU as a whole in the Spring Forecast. Growth in 2021 will also be slightly less robust than projected in the spring.
The European Commission has prolonged the validity of several State Aid rules which would otherwise expire at the end of 2020 “to take the effects of the current crisis into due consideration.” Several of these measures are already under review as part of a “fitness check”. In its legislative proposal for the prolongation, the Commission argues that the extension is necessary because more time is needed to fully evaluate the rules, and to ensure legal certainty and stability for stakeholders.