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The drafting of this programming document takes place in the aftermath of an unprecedented context. The EU, along with the rest of the world, has been severely affected by the COVID-19 pandemic and Russia's war of aggression against Ukraine. More than 14 million Ukrainians have been displaced, unfolding suffering and an unparalleled humanitarian and refugee crisis in Europe since the second World War. While the unprecedented response to COVID-19 from the EU and EU Member States prevented millions of deaths and a fully-fledged recession - with headline figures returning to the levels of pre-COVID-19 at the beginning of 2022 - the war in Ukraine led, inter alia, to an important surge in the prices of energy, food and other commodities, as well as the disruption of many established supply chain links, thereby exacerbating already existing headwinds on growth. Despite the strong headwinds, the European Commission's Summer 2023 Economic Forecast reported that the performance of the economy is expected to remain subdued with a growth rate of around 0.8% in 2023 and 1.4% in 2024. Inflation has decreased, although it is expected to be 6.5% in 2023 and decrease to just around 3.2% in 2024. While the rise in the cost of living is hitting low-income families disproportionally as they spend a higher fraction of their income on consumption and energy, a large majority of EU citizens will feel their purchasing power substantially weakened over the next period. And while energy prices have dropped since the peak mid-2022 period, companies in the EU remain confronted with this extremely challenging internal and external context with higher production costs, supply bottlenecks and higher financing costs leading to a sharp decrease in the business confidence. The high uncertainty linked to the economic environment, the outfall from the war in Ukraine, and the subdued global growth, especially the deceleration of growth in the US, is having a dampening effect on investments as well as spending and is leading to a stronger negative impact on the EU economic outlook with ensuing social consequences as the cost of living increases, the labour market situation remains challenging and social protection systems are put under pressure. In addition, EU member states are faced with the unprecedented challenge of hosting and integrating the millions of Ukrainian refugees fleeing the war. There can be no doubt that the EU will be facing an uncertain and challenging context in the coming years.
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