Published: 23/09/2020

According to the new secular stagnation theory, the ongoing technological changes and unfavourable demographic trends reduce demand for capital and labour.

Apart from obvious benefits, the EU-13 have also incurred certain hidden costs. Those are related to issues such as emigration, a pressing problem for the Central and Eastern European countries. It was unexpected that the population outflow from the region should reach the levels observed in 2004: an average of 4.78 per cent of the EU-13’s citizens moved to the EU-15, with the largest migrations noted from Romania (ca. 10 per cent), Croatia (8 per cent) and Lithuania (6 per cent). The tax havens pose another problem, generating billions of losses every year. According to estimates, since 2004, they have cost Poland EUR 9 billion, the Czech Republic – almost EUR 5 billion, whereas Hungary – more than EUR 3.5 billion.

Challenges for the future

The current problem faced by the whole world is the ongoing COVID-19 pandemic; in contrast to the financial crisis of 2008–2009, it was first reflected in the market presence of businesses and job losses. Although it is difficult to predict the future course of the pandemic, most economists expect a marked bounce-back in 2021.

Europe’s stagnation is the most serious threat. Considering the previous GDP patterns, an enormous threat facing us is that Europe may stop growing. In terms of investment as a share of GDP (21.3 per cent in Europe), we are behind China (43.3 per cent), Korea and India (ca. 31 per cent each), or even Russia (22.8 per cent). In order to improve Europe’s post-pandemic situation, in June 2020, the leaders of all the Member States adopted a financial plan estimated at nearly EUR 2 trillion. Its largest direct beneficiaries will be Italy (EUR 150.2 billion), Spain (EUR 142.6 billion) and Poland (EUR 124.9 billion).

‘The pandemic has demonstrated that we must be much better prepared for the unexpected. As predicted by experts of the World Economic Forum, extreme weather conditions, unsuccessful climate action, natural disasters, the loss of biodiversity and human-made environmentally mediated diseases would pose the most significant risks to the world. Infectious diseases were last identified as a major threat in 2015 when the Ebola epidemic broke out. The current pandemic has only more explicitly shown that we must be prepared for the unpredictable,’ concludes Piotr Arak.