The roadmap to a sustained, green, inclusive and resilient recovery

Info talks to Monica Scatasta, Director of the CEB’s Technical Assessment and Monitoring Directorate (TAM) about the impacts of the COVID-19 pandemic and how the CEB’s member countries can build resilience into their recovery strategies.

monica scatasta.pngInfo: What ongoing challenges will CEB member countries face after COVID19 emergency? 

MS: First, we will have to live with the health emergency for a while longer until a safe, affordable vaccine is rolled out worldwide, possibly with multiple contagion waves. Emergency management and recovery strategies will therefore need to coexist. The COVID-19 crisis showed that both public and private sector systems were unprepared to deal with a large-scale emergency - a strong warning as we will face even more severe impacts from climate change. What we do next is crucial. 

We face multiple, intertwined emergencies and longer-term crises – health-related, economic, social and environmental, including the climate crisis. 

The COVID-19 crisis was partly caused by human activities’ encroachment on natural habitats. Impacts on human health were worsened by the debilitating effects of air pollution. And climate change compounds the risk of new pandemics and their impacts. Heatwaves could wreak havoc during confinement and the health emergency increases the difficulty of dealing with severe storms or floods, as we saw in India and Bangladesh. 

Social inequalities increase the impact of health emergencies on lower income, marginalised and vulnerable groups. 

COVID-19 shone a stark light on inequalities in Europe. Addressing them is key, as societies are only as resilient as their most vulnerable elements. Unfortunately, the pandemic’s impact on the economy is likely to worsen social inequalities and may reduce the fiscal and political space to support the SDG and climate agenda - a dangerous vicious cycle. 

As CEB member countries design their stimulus packages, they may find it difficult to identify solutions that address the interconnections between multiple crises. Yet lowering the efforts to reach the SDGs and achieve climate goals would set the stage for a much deeper socio-economic crisis, undermining the resilience of the recovery.

We cannot “reboot to January 2020” – and should not try to. 

The pandemic hit an already fragile system. GDP growth and total factor productivity had been decreasing for some time in many of our member countries. Some had not yet fully recovered since the 2008 crisis. Many economic activities will no longer be viable in a post-COVID world or may need thoroughly revised business models, potentially leading to a structural reduction in employment in some sectors and geographies.

Economic stimulus packages need to take this into consideration, supporting households when their source of revenue is no longer viable and retraining programmes that prepare workers for new opportunities.

As difficult as it may be to see it, there is a silver lining in all this. 

We seem to be turning the page on austerity policies in favour of the view that we have to grow out of this crisis. 

Debt to GDP ratios will grow, as will the indebtedness of companies and households. Investment will have to ensure short term employment creation and long term efficiency and productivity gains. Simultaneously addressing the climate and environmental crises and making our societies more inclusive is possible and may in fact generate more sustained growth and employment than returning to a fossil-based, unequal economy. It is encouraging to see that the EU Recovery Package proposed by the European Commission recognises this by calling for investment and reforms in line with the Green Deal.

Info: What can European countries do to better respond to these challenges? 

iStock-1162045336.jpgMS: We need to support a green, inclusive and resilient recovery. Our member countries have an opportunity to transform their economies, societies and landscapes. The CEB can support this transition and help them ensure that no one is left behind in the process. 

Ample investment opportunities exist that could rapidly create new jobs and spur sustained growth, while delivering substantial environmental and social benefits. 

Much needs to be done to improve the accessibility, quality and resilience in the provision of all basic services, including health, education or water and sanitation. 

In the health sector, for instance, primary and preventative care are key in making health systems and people more resilient, including by addressing conditions, such as hypertension, that aggravated COVID-19 mortality and also increase preventable deaths and healthcare costs. 

For over a decade, many member countries have underinvested in infrastructure. 

It is time to launch infrastructure investment programmes that also reduce carbon dependency and increase resilience to a broad spectrum of risks, first and foremost climate-related risks. 

Investing in the transition to low carbon and climate-smart productive systems, for instance in the energy or agri-food sectors, can lead to more sustainable supply chains and create new employment. 

Cities will have a key role to play. Rethinking urban spaces can generate multiple benefits for human well-being and the environment – including the creation of more green areas, modal shift in urban mobility, the design of multi-centric cities with local accessibility to employment, commerce and basic service, or revamping the role of smaller centres while strengthening their integration with large cities. Improved spatial planning and related investment can increase our landscapes’ resilience and may help revamp economic depressed areas. 

Finally, there is also a need to increase investment in environmental protection and in the enhancement of natural capital. Improved governance will be key to a sustainable, resilient recovery. Making the right policy choices will be crucial. These will have to be clearly communicated to citizens. Many solutions will require coordination across sectors, geographies and levels of government. 

In this context, the capacity for multilateral institutions to rapidly mobilise support and to show results, like the CEB did, can be very important.

Info: What part will your Directorate play in the recovery? 

MS: The CEB is ideally positioned to support member countries’ recovery, and we’ve shown that we can respond quickly, flexibly and creatively to meet client needs. My team houses the Bank’s sector and thematic experts. We quickly mobilised to support this rapid response, including by streamlining procedures for emergency projects. 

Looking ahead, we will continue to assess how the COVID-19 crisis may impact the CEB’s areas of activity to help address challenges and identify opportunities. 

We are ready to work with clients and beneficiaries to design and implement their recovery strategies and to strengthen their overall resilience, enabling them to “bounce back better” from the crisis as EC President von der Leyen aptly put it. 

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