The Circular Economy and COVID-19 Recovery
How pursuing a circular future for Europe fits with recovery from the economic crisis

The COVID-19 pandemic has been catastrophic, with tens of millions of cases and more than a million deaths, and severe economic impacts around the world. As policy-makers grapple with this public health crisis, they also face the need to mobilise recovery efforts to revitalise an economy hit by the effects of the pandemic. EU leaders rightly recognise this as a watershed moment: major investments are in preparation both at the EU level and within Member States, and they could shape the continent’s economic development trajectory for many years.

In this report, we analyze the circular economy in light of the economic crisis and provide recommendations to policy-makers. We find that the circular economy remains highly relevant for the EU’s economic priorities – both in terms of longer-term potential as well as contribution in near term to the recovery of the economic crisis. Our key conclusions are:

The circular economy remains a major long-term opportunity: By 2030, it could unlock as much as EUR 535 billion per year in economic gains (looking at major value chains mobility, built environment and food) while also increasing resilience, reducing inequality, boosting local jobs, and helping EU reach its climate targets.
The ongoing transformation is at risk: We estimate that EUR 50-70 billion of the 2030 potential from existing momentum is at risk due to challenges from the economic crisis (e.g. market shocks, falling investments, falling raw material prices, liquidity problems and insolvency risks and risk of lock-in to legacy systems).
Circular economy offers a major near-term stimulus opportunity: The circular economy offers a rich investment agenda that could support recovery in the near term (through mobilizing idle resources or unlock economic value), while also setting the EU on a path to realise long-term value of EUR 160 billion per year.
The circular economy is a highly relevant agenda in the crisis: The large majority of the circular economy potential offers synergy rather than challenge to recovery efforts, without substantial near-term net costs that will challenge the recovery.
Near-term action is important: To capture both the near- and long-term value, there is a need for policy-makers to act fast: i) Signal continued commitment, ii) Safeguard the current momentum through targeted financial intervention, iii) Incorporate the circular economy in stimulus programmes, and iv) Continue to pursue long-term value through a coherent circular economy policy framework.
European leaders have expressed a desire to include the circular economy in recovery plans, and some countries are already taking steps in that direction. We hope that the analysis presented in this paper will support such efforts.