Poland would be the least affected in Europe, with a drop of 4.3 percent, Paolo Gentiloni forecasts

European Union says pandemic recession will be worst in its history. The European Union warned Tuesday of a massive hit to Europe's economy from the coronavirus lockdowns, saying that the contraction this year could be the worst in the continent's post-World War II history.

E.U. policymakers offered a grim forecast, predicting that even if the handling of the crisis goes smoothly and societies do not need to shutter again now that many have started easing restrictions, the economy of the European Union is expected to shrink by 7.4 percent in 2020. By comparison, in 2009, which was the worst year of the global financial crisis, Europe’s economy declined by just 4.4 percent.

The forecast made clear that the pandemic has obliterated Europe’s slow recovery from that crisis. After a partial bounceback next year, the bloc’s economy will still be 3 percent below the previously forecast level by the end of 2021.

“It is now quite clear that the E.U. has entered the deepest economic recession in its history,” said Paolo Gentiloni, the top E.U. economic official, outlining a grim picture of rising unemployment and dashed opportunities.

Despite the expectation that the economy will grow by 6.1 percent next year, the forecast said that if infections rise again, another three percentage points could be shaved off the economy this year, worsening the crisis even more. If E.U. countries fail to coordinate their economic response, Gentiloni said, the crisis could also be worsened.

So far, there have been deep divides among E.U. members about how to fight the crisis. Southern European countries that have been hit the worst by the virus have pushed for transfers of money from the stronger nations in the bloc, and a collective effort to fend off the recession. Northern countries including the Netherlands and Germany are more skeptical.

The projections also made clear that the economic consequences of the pandemic will be unequally spread across Europe. Spain, Greece and Italy will be walloped by the crisis, with their tourism-dependent economies shrinking by more than 9 percent this year and recovering more slowly, since elements of the tourism sector may take a permanent hit. France would also take a blow, with a decline of 8.2 percent, while Germany would be relatively better off, shrinking 6.5 percent. Poland would be the least affected in Europe, with a drop of 4.3 percent.

The unequal blow may make a coordinated response more difficult among E.U. nations, with some countries feeling the crisis more keenly than others. The bloc was also somewhat hamstrung in 2008 and especially during the euro crisis that started two years later, when Greece needed multiple bailouts to keep afloat amid dissension about how generous other countries should be with Athens.

Unlike the United States, which can print and borrow an almost unlimited amount of money to finance its goals, countries that use the euro currency are more limited in their responses because they share control over the European Central Bank instead of directing monetary policy on a national level.