The recovery plan for Europe and its importance for the future of European integration

Pavla Netusilova and Martin Kabrt

A chapter in CNB Global Economic Outlook - December 2021, 2021, pp 13-20 from Czech National Bank, Research and Statistics Department

Abstract: "Europe will be forged in crises, and will be the sum of the solutions adopted for those crises", predicted Jean Monnet as early as 1976. The COVID-19 pandemic is the latest example of an economic shock which has brought another milestone in the history of European integration. In response to the temporary shutdown of their economies, for the first time ever, the EU countries have embarked in solidarity on significant fiscal risk sharing through joint borrowing. This article provides a closer look at the triple meaning of the European recovery plan (NGEU), as the largest form of fiscal transfer in the history of the EU, as a novelty in European financial markets and as a tool for transforming the European economy. NGEU-funded projects do not focus on completely new areas, but help to advance the previously planned EU environmental and digital objectives, leading to a further partial shift of decision-making on national spending priorities to de facto EU competence. In contrast to the earlier joint financial instruments (EFSF, ESM), which also served to raise finance on capital markets during the debt crisis, the NGEU does not only apply to euro area countries, but to all EU Member States. Moreover, the financial support to Member States takes the form of non-repayable grants alongside loans. Thus, the currently approved plan does not create a two-speed Europe, but builds on the principle of a united and solidarity-based Union.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cnb.cz/export/sites/cnb/en/monetary-po ... 1/gev_2021_12_en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnb:ocpubc:geo2021/12

Access Statistics for this chapter

More chapters in Occasional Publications - Chapters in Edited Volumes from Czech National Bank, Research and Statistics Department Contact information at EDIRC.
Bibliographic data for series maintained by Tomas Karhanek ().