Economic recovery now underway, but remains fraught with uncertainty

Industrial production in the EU27 rose by 11% and retail sales increased by 16% from April to May in a clear sign that the economic recovery is now underway, with lockdowns having been gradually eased across Europe. However, the speed and trajectory of the recovery remains highly uncertain and subject to second-wave flare-ups of the epidemic. Industrial production in the EU27 in May was 21% below its May 2019 level, whilst retail turnover was 4% below the May 2019 level, suggesting that more export-oriented sectors are particularly affected as global trade and growth remain heavily suppressed as a result of the pandemic. Whilst recent agreement on an ambitious Next Generation EU recovery plan offers immediate respite, policy-makers at all levels must remain committed to supporting the recovery with a focus on job creation and growth-enhancing policies and reforms to ensure a full and speedy recovery.