You would be hard-pressed to find two institutions more important to the EU economy than the Commission and the European Central Bank. However, their views on what COVID-19 will do to Member States’ financial standing could hardly be more different. While the ECB predicts a -15% shrinkage of the eurozone economy as a result of the virus, the Commission makes a much rosier (though still unprecedented) prediction of -7.7%
It’s said that if you lay every economists in the world end-to-end, they still wouldn’t reach a conclusion – but this is not just an example of academics splitting hairs. The Commission’s forecasts consistently boost the economic prospects of EU Member States (and especially the eurozone) more than reality warrants. This could cause some real headaches. For example, in the Brexit talks, politicians increasingly believe the Commission is basing negotiating priorities on what it wished the EU economy looks like, rather than what it actually does.
If the Commission becomes the linchpin for mutualised EU debt this problem will only get worse – and the markets will be a lot less forgiving than officials and journalists have been to date.
