ABSTRACT
Member States of the European Union (EU) have witnessed the global financial crisis (GFC) and the COVID-19 pandemic. The GFC increased poverty and income inequality. The COVID-19 pandemic is expected to cause the increase again. The EU recognised that in response to GFC, it needed to consolidate public finances to control the public deficit and debt. However, in response to the COVID-19 pandemic, the EU opted for an expansionary economic policy. Against this background, this chapter analyses the economic changes introduced in the EU due to the GFC and the COVID-19 pandemic, respectively, with a focus on evolution of poverty, extreme poverty, and income inequality. Two composite indices advanced: one referring to human development according to the EU’s socio-economic basis and the other reflecting the degree of EU’s values of freedom, political stability, and the rule of law. The objectives of this chapter are first, to analyse the connection between poverty and income inequality with the economic cycle and the public policies carried out, and second, to study the response of the 27 Member States to the negative effects of the COVID-19 pandemic. This allow the Member States to be classified into four typologies with preparedness for future challenges.
