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Bloc should be wary of possible new Covid variants

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Paolo Gentiloni was the European commissioner for economic affairs and spoke to Forum The European House Ambrosetti on September 20, 2020.

Michael Green | CNBC

BRUSSELS — New variants of the coronavirus could still derail the growth rebound seen in Europe, according to the EU’s economics chief, as the region deals with another surge in infections.

Paolo Gentiloni was the EU commissioner for taxation and economics. However, there are high projections of GDP for the year.

Gentiloni responded to a question about the EU’s top threat. We need to be cautious about new varieties and strengthen our vaccinations.

According to him, new restrictions could be implemented. “They will not have the same impact, the same economic impact than previous ones … our economy is more acquainted to these kind of situations,” he added.

The European Commission, which is the executive arm and head of the EU, predicted a 5% increase in GDP for the EU as well as the Euro area last week.

It was noted that, “despite the mounting headwinds”, the bloc can still grow rapidly in the following two years.

Some EU states have already begun to observe a high number of Covid-19 infections in recent daysIt is most common in areas where the vaccination rate remains low. Austria and the Netherlands have imposed new social restrictions in the last few days.

The question of energy prices is another area of uncertainty. There was a sharp rise in the prices of natural gas, electricity, and other commodities after the summer. However, some government interventions were not enough to prevent this from happening.

Inflation in the Euro Area will hit 2.4% in 2021. It then declines to 2.2% by 2022 and 1.4% by 2023, according to the Commission.

Market participants are monitoring the rise in consumer prices closely. Many expect that the European Central Bank will tighten its policies throughout 2022 and announce possible rate increases late next year. The ECB says that the higher inflation is temporary.

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