How has the EU dealt with the pandemic?

Guy Verhofstadt, former Belgium prime minister and Brexit negotiator, and current MEP, shared his insights into some of the biggest challenges facing the EU at Fund Forum last year. Does his comments on Europe's handling of the crisis, while facing Brexit, still ring true?

Then, the EU was dealing with a number of concurrent crises including COVID-19 and ongoing Brexit uncertainty. However, Verhofstadt told the Fund Forum audience these dual problems were not insurmountable, in this report from last year's digital event.

Brexit: A deal is within reach

Verhofstadt expressed his optimism that some sort of a Brexit agreement was achievable, either by the end of October or at the beginning of November.

He continued there were three barriers precluding a deal. The first, he said, concerned fishing rights. Under existing EU rules, 60% of the catch in UK waters is reserved for British fisherman with the rest allocated to trawlers from Ireland, Belgium, Holland and France. Post-Brexit, the UK has said it will refuse to surrender fishing rights to EU markets, something which could have a devastating financial impact on EU fisherman.

Verhofstadt was bullish negotiators would find common ground on this sticking point. Other areas of contention, he explained, included a UK refusal to be bound by EU state aid rules and ECJ oversight.

COVID-19: A united front

In contrast to the 2008 financial credit crunch and the subsequent eurozone debt crisis, the EU has responded to COVID-19 quickly and effectively. Verhofstadt derided the EU’s response to the financial crisis as woeful relative to that of the US, a lasting consequence of which is that the EU has now suffered from a lost decade whereas the US economy rebounded. “We have learned from the lessons of the GFC,” he commented.

Having announced an initial 750 billion euros bond purchase programme in March 2020 through the Pandemic Emergency Purchase Programme (PEPP), the European Central Bank (ECB) stated it would increase the rescue package by a further 600 billion euros. In total, the PEPP scheme will cover 1.35 trillion euros in bond purchases. This decisiveness and rapid intervention by European policymakers was the EU’s ‘Hamilton moment’, said Verhofstadt.

More work to be done

While the EU’s response to COVID-19 has been noteworthy, Verhofstadt warned there were still a number of unresolved issues. He pointed to the absence of a common, EU-wide strategy on migration. He added the EU’s digital industry continued to be a minnow relative to its peers in the US and Asia-Pacific.

He attributed this deficiency to a lack of an EU internal digital market and regulator, in contrast to the US. He also warned that while EU members had sizeable armed forces, the bloc’s ability to shape geopolitics was hamstrung by the dearth of unanimity between countries.