European Economic Policy in the COVID-19 Crisis. Between Rescue Packages and Economic Stimulus Measures

All EU countries experienced a historically abrupt economic slump in 2020. In response, EU governments initiated aid packages to support affected households and economic sectors through the crisis months. The active role of fiscal policy and monetary policy prevented an even deeper economic slump in 2020 and kept the consequences of the crisis in check so far. At present, government spending primarily has an insurance function to cushion the shock to businesses and households, but it is providing less stimulus at the moment. Such a stimulating effect can only occur once COVID-19 is contained and the pandemic has subsided. In the near future, an expansionary fiscal policy will continue to be necessary for a sustainable upswing of the economy.