EconPol Policy Reports

EconPol Policy Reports conduct comprehensive economic analysis on current European economic and fiscal policy issues, fostering a deeper understanding of European economic development and the implications of policy measures. The reports provide valuable insights into policy scenarios and the impact of economic policies, facilitating informed public discussions and evidence-based policy making. EconPol‘s mission is to contribute to the crafting of effective economic policy in the face of the rapidly evolving challenges faced by the European economies and their global partners and to provide well-founded advice to European policymakers.

EU Innovation Policy: How to Escape the Middle Technology Trap

Clemens Fuest, Daniel Gros, Philipp-Leo Mengel, Giorgio Presidente, and Jean Tirole

The EU is losing the global innovation race. EU industry invests less than its peers in R&D, it lags way behind in software and artificial intelligence, and its pharmaceutical component is at risk. For over 20 years the same companies, mostly from the automotive sector, have dominated EU innovation activity. 

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Watts Next: Securing Europe’s Energy and Competitiveness

Where the EU’s Energy Policy Should Go Now

Frédéric Gonand, Pedro Linares, Andreas Löschel, David Newbery, Karen Pittel, Julio Saavedra, Georg Zachmann

Russia’s invasion of Ukraine in February 2022 led to gas supply in Europe dropping significantly, shaking the EU out of its complacency regarding energy procurement and consumption habits. The costs of going green on top of more expensive energy are putting a strain on European competitiveness, with higher energy prices hitting the chemical, steel and metal processing industries in countries like Germany, Spain or Poland particularly hard.

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Climate Policy Priorities for the Next European Commission

Clemens Fuest, Andrei Marcu, Michael Mehling

From the earliest announcement of the European Green Deal, the current EU political cycle has been defined by an unprecedented acceleration in the scale and pace of climate policy. Under difficult conditions that sometimes tested the ability to engage stakeholders, including various external shocks, the EU has put forward and largely passed an unprecedented legislative agenda, which was meant to have, and is having, deep impacts on the EU economy and society at large. Much has changed in the world since the European Green Deal and the “Fit for 55” packages were conceived, including a dramatic increase in industrial policy actions by Europe’s trade partners, a deteriorating geopolitical landscape, and an energy crisis that has been aggravated by these factors, all of which has led to persistent fiscal and economic pressures. 

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Monitoring the Impact of Sanctions on the Russian Economy

Quarterly Report Vol. 2

Vasily Astrov, Lisa Scheckenhofer, Camille Semelet, Feodora Teti

In 2023, Russia experienced a 3.5% economic growth, but forecasts for 2024 indicate a slowdown to 1.5% due to tightened monetary policies and the expected global economic slowdown. Despite large military spending and Western energy sanctions eroding budget revenues, fiscal deficits have been generally kept under control. Intensified scrutiny of third-country firms violating energy sanctions widened discounts on Russian oil prices in late 2023. Generally, Russian import patterns remained relatively stable. In particular, EU exports of economically critical and common high priority goods to Russia in November 2023 represent just 2% of its prewar levels, underscoring the effectiveness of sanctions in halting direct exports. Besides China and Hong Kong, Türkiye and CIS countries became vital suppliers, meeting Russia's demand for economically critical goods and high-priority items.

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Monitoring the Impact of Sanctions on the Russian Economy

Quarterly Report Vol. 1

Vasily Astrov, Artem Kochnev, Lisa Scheckenhofer, Vincent Stamer, Feodora Teti

 Despite EU restrictions, only around one-third of pre-war exports to Russia are fully sanctioned; most trade remains unaffected or subject to numerous exemptions. While exports have decreased by 32%, imports have increased by 17% due to innovative ways to bypass trade sanctions. China is Russia’s most important alternative country of origin for products under sanction: 61 percent of all products subject to sanctions come from China. The Russian economy shows signs of recovery, driven by robust domestic demand from wartime fiscal stimulus, contributing about 10% to GDP in 2022-23. Real GDP and industrial production have grown by 2.5% and 3%, respectively, indicating recovery from the economic crisis.

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