The European economy suffered from a great recession in 2020 under attack by the COVID-19 pandemic. The monetary policy of European Central Bank and national fiscal policies of European countries have enhanced economic resilience and resistance in crisis，and thus prevented mass unemployment and bankrupt. Currently，the European economy is showing some evident signs of stabilization and recovery. Expansionary fiscal policies have also triggered a surge in fiscal deficits and government debts across European countries. Due to the recurrence of COVID-19 pandemic，it is expected that the European economy，in spite of a moderate recovery，will encounter downward risks and remain in a cycle of “low growth，low inflation，high deficit，and high debt” in 2021. The implementation of the recovery plan will contribute to the future economic growth of Europe，but the long-term structural challenges cannot be ignored.