NGEU soon to be rolled out

The launch of the European recovery fund, called Next Generation EU (NGEU), is potentially a big step forward for at least three reasons:

• From a cyclical point of view, NGEU is raising heavy amounts in order to support demand and accelerate the post-Covid recovery, in particular in “peripheral” countries, which have been hit harder by the crisis and are threatened with falling even further behind “core” countries.

• From a structural point of view, it can be a powerful way to combine public investment and reforms to improve supply and, hence, potential growth.

• It is also a significant step forward in terms of European fiscal solidarity, with the EU issuing debt in its own name (thereby also creating a European “risk-free asset” in large amounts) and distributing grants to member-states in amounts that are not proportional to their GDP.

Read More