THE STATE OF THE EUROPEAN UNION REPORT. Europe in a period of transition

THE STATE OF THE EUROPEAN UNION 82 widen the economic and social gaps among the commu- nity partners, inflicting a fresh setback on the necessary process of real intracommunity convergence. According to European Commission figures, Spain was the country struck hardest by the crisis with a dou- ble-digit drop in GDP (10.8% in year-on-year terms) in 2020, followed by Italy (8.9%), Greece (8.2%), and France (7.9%). German GDP, meanwhile, fell by just 4.8% and swells the ranks of the 14 Member States that reported falls below 5%. Nearly a year-and-a-half after the start of the pan- demic, the growth forecasts augur widespread recovery in the EU as a whole (European Commission, 2021a) at an average rate of 4.8% in 2021 and 4.5% for 2022.Yet the recovery in terms of GDP per capita, the macroeco- nomic datum that is traditionally used to gauge intracom- munity convergence, will be highly uneven. Thus, most of the members in the east will manage to exceed 2019 GDP per capita levels in 2022, posting growth above the EU27 average, which favours their rate of convergence. At the other extreme, five Member States will still re- port falls in their GDP per capita in 2022, compared to pre-pandemic levels. As a result, in 2022 the Czech Republic, Spain, Cro- atia, Italy, Cyprus, Malta, and Portugal will have strayed even further from the community average, hampering their convergence processes and, above all, posing a challenge for the recovery phase. And despite the fact that even these forecasts already include the positive effects of the recovery and resilience plan on the various economies of the Union. In parallel, the pandemic has caused an asymmetric increase in unemployment rates among the EU countries, both because of the uneven productive structure and the different capacity or efficacy of economic policy measures and, of course, because of the existence of very different 116 55 93 131 120 86 208 68 89 104 66 94 87 73 88 257 76 94 126 123 77 78 74 90 72 111120 -10 -5 0 5 10 15 20 25 30 -100 -50 0 50 100 150 200 250 300 BE BG CZ DK DE EE IE GR ES FR HR IT CY LV LT LU HUMT NL AT PL PT RO UE 27 = 100 SI SK FI SE Per capita income 2022 (EU 27 = 100) (left axis) Points lost or gained compared to 2019 (right axis) Source: authors’ own creation based on Eurostat and AMECO (figures taken from July 2020) FIgure 1. Level of GDP per capita in 2022 (EU27=100) and development compared to the year prior to the pandemic (in p.p.)