Following the 2009 Great Recession, the EMU has experienced modest growth overall. The annual growth rate of GDP from 2010 – the first year of the recovery – to 2019 averaged 1.36 per cent. In 2012 and 2013 growth was negative and in 2019, before the outbreak of the Covid-19 crisis, it was only 1.2 per cent (Eurostat 2020). Figure 7.1 shows that the EMU countries performed differently. Italy's economy, for example, remained in stagnation and Greece has far from overcome the effects of the sovereign debt crisis of 2010. In 2019, ECB refinancing rates were still at zero and it had restarted its monthly net interventions to buy public and private bonds. There were already clear signs of an economic downturn in the second half of 2019, although the extent of this was not yet clear. The Covid-19 crisis, which came to a head in early 2020, was consequently untimely for Europe.

Despite all the uncertainty of forecasts, it is clear that the Covid-19 recession will be profound. The ECo (2020b) expects EMU GDP to shrink by 7.7 per cent in 2020: 6.5 per cent in Germany, 8.2 per cent in France, 9.4 per cent in Spain, 9.5 per cent in Italy and 9.7 per cent in Greece. This economic slump will be the most severe Europe has experienced since the Second World War. As in the Great Depression of the early 1930s, fundamental economic and political changes cannot be ruled out. In early summer 2020, as we write this chapter, economic development in the immediate future remains extremely uncertain.

The immediate reaction of EMU member states to the Covid-19 crisis demonstrated yet again how uncoordinated the EU still is in the face of threat. At the outbreak of the pandemic, each country tried to navigate the emerging problems alone. Some countries, such as Austria, initially ignored the health hazards, only then to close its borders to neighbouring countries without consultation. Other countries quickly followed suit. In addition, each country adopted its own health protective measures, such as differently targeted travel bans, specific shutdowns for schools and restaurants or curfews or social distancing rules. The ECo was demonstrably too weak to play a coordinating role.