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The United States approved another Covid-19 support package for residents earning up to $ 75,000. dollars (62 thousand euros) per year.
Depending on their marital status, they will receive $ 1,200 (€ 1,005.61) or $ 1,400 (€ 1,173.22) in checks, which they can cash at any bank.
In the European Union (EU), support is more complex: various programs and measures are being developed, and wage subsidies are being given to employers. So why is American money so easily distributed to the population and the EU chooses a more complex avenue of support?
America is saving not just itself but Europe
Sigismund Mauricas, chief economist at Luminor Bank, pointed out that the economic situation in each EU country is different.
“It would be difficult to decide how much the EU countries could share with their populations. For example, 1,200 euros would be a huge amount of money for the people of Bulgaria, and it would be like pocket money for the people of Luxembourg.
The EU also has a limited budget. Only a great effort has led to an agreement on 750 billion. the creation of a euro recovery fund that will be financed by all EU countries. There has been a lot of discussion about this support fund. And the frugal fourth (Holland and the Scandinavian countries) even opposed the subsidies and sought to obtain money through loans ”, explained the economist.
According to him, each EU country decides individually what assistance to provide.
“Some of them, including Lithuania, had similar initiatives: distributing money to a wide circle of the population. Last year, the government distributed 200 euros to each of the retirees. However, these initiatives have a cost for the national budgets. .
And America’s decision to share the money is not just to revive its own economy, which is currently recovering very fast, but also to save Europe. It also benefits from the export of goods to the United States. And the EU does not have the objective of saving anything else, so it only takes care of its own fur, “said Ž. Mauricas.
The economic gap between EU countries is widening
According to the economist, the gap between EU countries is widening.
And if the uncertainty about the application of quarantine measures persists, it will only increase. For southern European countries, where tourism is the main economic engine, this year will be difficult. At that time, the situation was different in Scandinavia, especially in Sweden, which had almost no quarantine. EU countries must agree among themselves on the distribution of the money. So, if the countries of the South wanted to distribute money freely, other countries would be against it.
Furthermore, there is a risk that the EU will subsequently be made up of recipient and donor countries. And this goes against the EU’s approach of making the poorest countries catch up with the richest. If in the past there was a big gap between the countries of Eastern and Western Europe, now it is widening between the countries of the North and the South ”, Ž said. Mauricas.
Distributed money encourages consumption
Tadas Povilauskas, an economist at SEB Bank, said that the United States distributes money to the population because it is a very fast way to inject money into the economy and thus stimulate consumption.
“However, the question arises whether everyone who receives money really needs it. The United States must be determined to address this problem. promised, that is, it is determined what income people will receive with that money.
What is still important is that the United States does not have a problem with loans because it has its own central bank and its own currency. And EU countries cannot borrow as much as they want. The distribution of money in European countries would increase the debt, so the objective in these countries is to use the money with more purpose ”, commented the economist.
According to him, the EU is working to develop effective and targeted aid measures to support certain populations. However, according to T. Povailableuskas, some economic stimulus measures in Lithuania were reminiscent of the methods chosen by the United States.
“Last year pensions and money for children were granted for the only time. The population spent money on goods or services, so it had a positive impact on the Lithuanian economy. However, the most criticized was this distribution of money, because the money was not given to those who suffered the most during the pandemic.
Today, the same decisions are made in Latvia, with the award of a lump sum of money for children and pensions. The Latvian government sees this as a quick way to pump money into the economy. Realizing that this measure is not the most effective, with subsidies everything takes time. Therefore, the objective is to reactivate the economy quickly. Although money is not given to those who need it. Furthermore, that money is usually simply overfished, ”explained T. Povilauskas.
The money distributed does not create added value
Swedbank chief economist Nerijus Mačiulis noted that the child’s money and pensions distributed last year determined that Lithuania’s GDP contraction was one of the smallest in Europe.
“It just came to our notice then. Also, residents are happy when money is freely distributed. However, it is more appropriate not to focus funds on stimulating short-term demand, but also in areas that would create added value in the future.
In this way, the EU is trying to shoot two bunnies, not only to help the economy recover more quickly from the pandemic crisis, but also to transform it. Therefore, the objective is to allocate funds to investments, digitization and abandonment of fossil fuels. This would help increase the competitiveness of the states ”, explained the economist.
According to N. Mačiulis, politicians always face a dilemma when it comes to allocating money.
“The question is, should the money be distributed here and now so that voters can be blessed and just eat the money, or can the money be used for long-term purposes? “The United States has taken a populist path and Europe aims to create profitable investments that will last for future generations,” the economist said.
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