Development convergence is taking place in the European Union, mainly due to the Central and Eastern European (CEE) countries’ accession to the EU.

Between 1995 and 2020, the economies of Central and Eastern Europe (CEE) grew on average by 3.1% annually, a pace more than three times faster than that of the so-called EU core countries. We observe clear institutional convergence, reflected in a fourfold reduction in differences between CEE countries and Western European countries in terms of legal standards, and a sevenfold reduction in differences in the level of economic freedom.

China, the United States, and the European Union together account for 60% of global GDP measured at current market prices and for more than half of global GDP measured in purchasing power parity (PPP). China’s dynamic development has led to a decline in the combined share of the United States and the EU in global GDP from 43% in 1990 to 31% in 2020. A closer look inside these three entities reveals significant differences in economic potential and regional growth dynamics. In China, as much as 82.5% of export value in 2020 was generated by eastern provinces. In the United States, three states—California, Texas, and New York—account for nearly one-third of GDP. In Europe, recent years have seen a growing role of Central Europe. Poland’s share in EU GDP increased by 1.7 percentage points between 2004 and 2020, making it the EU leader in this respect. These findings come from the Polish Economic Institute report “Transformations of growth engines in the world’s three largest economies.”

On November 17th we have discussed our report with Maria Demertzis, deputy director, Bruegel.

The European Union will reduce CO2 emissions by 55 per cent compared to 1990, but no sooner than 2032. Due to accelerated decarbonisation, the first 10 countries will achieve climate neutrality by 2045. The industry of key importance to the process will be nuclear energy, especially in the Member States previously relying on coal-fired power plants. At the same time, as many as 78 per cent of the experts surveyed by the Polish Economic Institute are of the opinion that a successful energy transition will largely depend on the elimination of fossil fuel combustion in EU cities – as follows from the PEI report entitled ‘European Union energy foresight’.

At present, as many as 7 Member States of the EU have public debts exceeding 100 per cent, with the limit laid down in the Maastricht Treaty at 60 per cent. In the US, the scale of the Fed’s quantitative easing related to the pandemic has been as much as 57 per cent higher than during the financial crisis. Despite the unprecedented fiscal and monetary expansion, in 2020 the US interest expenditure on public debt was a mere 1.7 per cent of GDP – half the level noted 30 years before. Today, the Bank of England speaks of climate more often than of inflation and the macroeconomic situation. The report of the Polish Economic Institute entitled ‘The new policy mix. The relationships between monetary and fiscal policy – lessons from the crisis’ gathers the most important observations from the economic policy conducted during the crisis. The authors indicate that the new policy mix should rely more on the experiences gained in recent years, reflect the state of the scientific debate and address present-day challenges, e.g. those related to climate change.

When the state spends money on roads and railways, we call it ‘investment’. When the state spends on nurseries, school meals, or health care, we call it social, educational, and health expenditure.

Although the volume of world trade in goods dropped by 5.5 per cent in 2020 against 2019, the demand for electronics soared and deliveries of computers went up by 13.1 per cent. Importantly, China’s share of world exports increased by 1.6 pps over the same period, whereas the respective proportion for Poland rose by 0.14 pp. Simultaneously, a mere 6 per cent of the Polish enterprises surveyed by the PEI declared to already participate in the supply chain shift from China – as follows from the report of the Polish Economic Institute entitled Globalisation during the pandemic.

Earlier today the European Commission has presented a plan of legislative proposals on new reduction targets along with a proposal to revise and extend the current EU ETS system to the building and transport sector.

“EURACTIV”: Plans to extend the EU’s carbon market to transport and heating fuels will have the greatest impact on the poorest households.