Europe's short- and long-term response to COVID-19: will the recovery align with EU’s climate ambition?

Four months into 2020 Europe is facing a global pandemic and an economic crisis which is of a different scale and magnitude to the 2008 financial crisis. If Europe is to prove its value, European solidarity should take shape by quickly using existing institutions – the European Commission, the European Investment Bank Group (EIB) and the European Stability Mechanism (ESM) – to alleviate the burden put Europe’s economy and on national healthcare systems.

The EIB has already mobilized €40 billion as an immediate support package for small and medium sized companies and is working on additional guarantees to scale up its support for European companies. This Pan-European Guarantee Fund would comprise €25 billion in guarantees from EU Member States, which could be used as leverage to mobilise €200 billion in additional financing for SMEs, mid-caps and corporates in the real economy.

Dubbed as Europe’s ‘climate bank’, the EIB’s crisis package focuses on the short-term by providing ‘coping capital’, while maintaining its focus on the longer-term delivery of the EU’s climate ambition. The purpose of EIB funds alongside those of other EU institutions, including the financial tools and mechanisms put in place will require careful coordination and consideration – will this crisis put the EIB on a different footing in the future?

Questions include:

• Is the EU climate ambition in jeopardy considering the current shift of priorities?
• What is the size of the challenge on the European economy?
• What is the EU institutions’ role and policies to reduce the economic impact on the engine of the EU economy, the SMEs?