Building back better?

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A holistic understanding of economic resilience is one in which economies can absorb and recover from crises whilst also adapting in ways that make future crises less likely. 

ZOE’s Economic Resilience Index is a tool for for quantifying how well economies are performing with respect to this holistic concept of economic resilience. 

In this paper we assess the economic resilience of EU Member States in the period 2019-22. 

The multitude of crises faced by the EU in the early 2020s led it to create a first-of-its-kind instrument explicitly designed to bolster Member States economic resilience: the €723 billion Recovery and Resilience Facility (RRF). Three years into the implementation of the RRF, this paper uses the Economic Resilience Index to assess the evolution in the resilience of EU economies and asks whether the RRF is contributing to ‘building back better’. 

Our main findings:  

• The overall economic resilience of the EU was stable in the last years – despite economic shocks in the form of the pandemic, the Russian invasion of Ukraine and the energy crisis 
• Latvia and Italy were able to increase economic resilience most in 2019-22 
• Poland and France saw the biggest falls in economic resilience 
• There was an overall convergence trend between Member States 
• Analysis suggests the EUs’ Recovery & Resilience Facility contributed to economic resilience, especially in countries with the most comprehensive reform and investment plans and which received the most funds per capita 
• Social Progress and Cohesion, which is necessary for economic resilience, stagnated – if not addressed this may detriment economic resilience in future