THE STATE OF THE EUROPEAN UNION. Reforming Europe in a time of war

23 Social Europe: Retaining the status quo during the pandemic, avoiding new disparities Björn Hacker Contrary to early assumptions, the social effects of the pandemic in the EU did not prove to be as serious as was initially feared. The reason for this is that, compared to the euro crisis, a significantly different style of crisis management came into play. This time, the focus was on a joint response and on supporting the states that were suffering most from the pandemic. However, looking at the social and employment indicators, the problems of vulnerable groups stand out. Added to this are the ine- qualities arising from previous economic crises that con- tinue to persist in regional socioeconomic development. The special focus on groups and regions that are par- ticularly socially disadvantaged remains highly relevant, even after the COVID-19 crisis, in the emerging double transformation – decarbonisation and digitalisation – of the European economy and in the face of the energy policy challenges brought about by the war in Ukraine. This report first discusses socioeconomic develop- ment during the pandemic. It then moves on to focus on the link with social and territorial inequality in the EU on the basis of a study on disparity published by the author (see Hacker, 2021) in which the EU Member States of Estonia, Finland, France, Germany, Italy, Romania, Spain and Sweden are used as examples. The report concludes with a discussion of the items that need to be on the EU’s social policy agenda up until 2030. Highs and lows of the European economy during the pandemic Following the sharp collapse of -5.9 percent (euro area: -6.3 percent) in the growth rate of gross domestic prod- uct (GDP) in the EU in 2020 compared to the previous year as a result of the measures taken to fight the COV- ID-19 pandemic, the economy did recover in 2021 de- spite further temporary lockdowns. GDP in both the EU and the euro area grew by 5.4 percent and thus restored a large part of the economic output that had been lost in 2020 1 . However, the emergence of new virus variants in some cases led to further restrictions on movement and trade in various regions of the world. Due to the more transmissible Omicron variant, which spread faster than previous virus variants, and partial lockdowns in some EU countries, economic growth proved to be very weak in the last quarter of 2021 (EU: 0.5 percent; euro area: 0.3 percent). The European Commission therefore expected further catch-up effects in 2022, amounting to a 4 percent increase in growth for both the EU and the euro area (European Commission, 2022a). This positive forecast was based on overcoming the COVID-19 pan- demic; it had not taken into consideration the geopo- 1  All data from Eurostat unless otherwise indicated.