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Tag Archives: Next Generation EU

Next Generation EU: How the EU’s Covid-19 Recovery Fund should be implemented

How can the resources made available through the EU’s Covid-19 Recovery Fund be used most effectively? Drawing on a new study, Riccardo Crescenzi, Mara Giua and Giulia Sonzogno write that it will be necessary for national governments to mobilise resources through the involvement of relevant stakeholders. To reduce the probability of implementation delays, projects should bypass regional governments in those states where delays are more likely, with citizens given direct involvement in...

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Thinking big: debt management considerations for the EU’s pandemic borrowing plan

If not handled correctly, the European Union’s transition to take on a new role as an issuer of public debt risks crowding out existing markets. Managing that transition correctly is almost as big a challenge as spending the money itself. By: Rebecca Christie Date: December 9, 2020 Topic: European Macroeconomics & Governance The COVID-19 crisis is set to propel the European Union for many years to come into a role its members had not anticipated: significant issuer of public...

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Next Generation EU payments across countries and years

How much cake does everyone actually get and at what speed? This blogpost estimates the yearly Next Generation EU (NGEU) payments to each EU country at current prices in euros and as a share of GNI. By: Zsolt Darvas Date: November 12, 2020 Topic: European Macroeconomics & Governance The Special European Council of July 2020 defined the total amount of Next Generation EU (NGEU) commitments at 2018 prices. Existing estimates, including my earlier ones, allocated these 2018 price...

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The European climate law needs a strong just transition fund

To deliver on the goals of the European climate law, the European Union needs finally to get coal out of its energy mix: the EU should quicken the pace of decarbonisation whilst delivering on its goal of social inclusion. The European Parliament will vote this week (7 October) on the Commission’s proposal for a European climate law, which would make binding a goal for the European Union of climate neutrality by 2050 and an intermediate emissions reduction target of at least 55% by 2030,...

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Will European Union countries be able to absorb and spend well the bloc’s recovery funding?

To help finance the post-coronavirus recovery, the European Union is raising large amounts to pass on to its members. But absorption of EU funds is typically slow and some countries might struggle to spend what they can get, even if they will have broad freedom to design spending programmes. The focus should be on worthwhile spending, not just on absorbing EU funds. By: Zsolt Darvas Date: September 24, 2020 Topic: European Macroeconomics & Governance The European Union’s...

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Next Generation EU: Why the blueprint for transforming Europe may have been long in the making

In July, EU heads of state and government finally reached agreement on a recovery package to tackle the socio-economic fallout from Covid-19. Daniel F. Schulz writes that although the agreement was unprecedented in its scope, Europe’s recovery strategy will draw heavily on the existing analyses and institutional structures of the European Semester. Ultimately, Europe’s leaders will be betting on the potential of renewable energy and digital services to create millions of jobs across the EU,...

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Is the EU Council agreement aligned with the Green Deal ambitions?

On 21 July, EU leaders agreed on a €1.8 trillion package that should boost the recovery after the COVID-19 crisis, but also contribute to the advancement of key EU societal objectives, starting with the climate transition. In this blog post we assess the green ambitions of the package and evaluate its consistency with the European Green Deal. After 91 hours of negotiations, EU leaders agreed on 21 July on a €1.8 trillion package that will contribute to the EU’s economic reboot after the...

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Having the cake, but slicing it differently: how is the grand EU recovery fund allocated?

The European Commission’s original allocation mechanism really favoured lower-income countries and to a large extent was based on pre-COVID economic data. The modification adopted by the European Council gives more consideration to the country size and the adverse economic impact of COVID-19. As a consequence, by using the Commission’s May 2020 economic forecasts, I estimate that only Germany and France will get more grants from the EU’s recovery fund compared to the Commission’s original...

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Three-quarters of Next Generation EU payments will have to wait until 2023

Because of hurdles in designing, approving and implementing European Union programmes, less than a quarter of the €438 billion in grants planned under the new EU recovery instruments is expected to be spent in the next two and a half years, when recovery needs will be greatest. Well-functioning financial markets can help bridge the gap between urgent spending needs and late-arriving EU disbursements, but more effort is needed to frontload EU payments. The falling government bond yields of...

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