European Central Bank President Christine Lagarde speaks with Managing Director of the European Stability Mechanism Klaus Regling during a media conference after a meeting of eurozone finance ministers in Lisbon on Friday. Associated Press

Euro zone finance ministers were upbeat on Friday about the prospects of the post-pandemic economic recovery, but said Europe would have to work hard to avoid long-term economic damage and not to fall behind China and the United States.

“We can see a recovery taking hold, but we also know that the challenges remain great,” the chairman of eurozone finance ministers Paschal Donohoe told a news conference.

“That the risk of scarring, the risk of damage from this pandemic in our societies, in citizens, and on the balance sheets of employers, continues to be real,” he said.

The long-term “scarring” effects of the pandemic could manifest themselves via a drop in business investment, as it did in the financial crisis a decade ago, European Economics Commissioner Paolo Gentiloni told the news conference.

It could also show in the disruption to young people’s education and training and through cuts in investment in intangible assets and research and development, despite the EU’s enormous investments in digital and green transitions.

“We are very conscious of challenges that many Europeans face at the moment, very conscious of the scars and the risks of the damage, and we will do our best to overcome those,” Donohoe said. European Commission forecasts show the 27-nation EU will reach pre-pandemic growth levels around the middle of 2022, with some, like Germany and France, already there at the end of this year and others, like Italy or Spain only at the end of 2022.

But China and the United States will rebound more quickly, forecasts show, and the eurozone will have to act soon to boost its growth potential if it is to stay among the top performers, the French finance minister said.

“Do we want to play in the first league, or do we want to lag behind China and US?” Bruno le Maire told reporters.

“We need more activity, more investment in new technologies. We have to improve the growth potential of Europe. Coming back to normal is not the right ambition. This is from a historic point of view the key decision that we will have to take over the next months,” he said.

Gentiloni echoed his remarks: “We cannot be satisfied with simply returning to the end-2019 GDP level. It is not only a rebound we are looking for. We are looking for strong, stable and sustainable growth,” he said.

The European Commission will assess over the next months reform and investment plans by EU governments aimed at making their economies more green and digitalised.

The schemes will be the basis for payouts of cheap loans and grants from the EU’s 750 billion euro ($917 billion) recovery fund, with first disbursements expected towards the end of July.

The unprecedented joint borrowing exercise will help growth, German Finance Minister Olaf Scholz said, praising it as a historic venture that will make the bloc stronger and bring it close to a fiscal union that markets have long been pushing for.

“Even when the crisis is over, we will see that we have made a big step towards a fiscal union, which will make us stronger to fight crises,” he said on entering the talks. “Europe will come out of this crisis better than it was before,” he said.

Spain to allow all tourists: Tourist magnet Spain will let people from anywhere in the world who are vaccinated against COVID-19 enter the country from June 7, hoping to galvanise a recovery in the devastated tourism sector.

The world’s second most visited country before the pandemic hit, foreign tourism to Spain plunged 80% last year as restrictions brought leisure travel to a virtual standstill, leaving its beaches, palaces and hotels almost deserted.

Entry will be allowed to vaccinated travellers regardless of their country of origin, and notably from the United States, Prime Minister Pedro Sanchez announced on Friday at Madrid’s FITUR international tourism trade fair.

Spain will also permit tourists from 10 non-eu countries deemed low-risk to enter without a negative PCR test for coronavirus from May 24.

Britain, Spain’s largest market for foreign tourists, will be included on the list, as well as Australia, New Zealand and Israel, among others.

“They’re welcome - more than welcome - without restrictions nor health controls,” Sanchez told reporters.

Spain was one of europe’s worst-hit nations in the pandemic, recording over 78,000 coronavirus deaths and 3.6 million cases. But infection rates have fallen and vaccinations are progressing fast, enabling most of its regions to scrap curfews.

Speaking a day after the eu reached a long-awaited deal for digital vaccine certificates, Sanchez said the return of tourism would be the key driver of Spain’s economic recovery.