ifo Institute Calls for Improvements to EU’s NGEU Covid Package
The ifo Institute has called for improvements to the NextGenerationEU (NGEU) coronavirus aid package. If the decision to retain control at the European level over how funds are used is to add value, there must be much more emphasis on projects with EU-wide significance, such as technology funding and cross-border infrastructure projects, write ifo President Clemens Fuest and ifo economist Florian Dorn in an article for ifo Schnelldienst 2/2021.
NGEU spending aims to promote European Commission policy priorities such as the Green New Deal. However, it will be difficult to prevent European funds from replacing national ones if that is what the member states want.
In addition, Dorn and Fuest add, NGEU’s redistribution of funds among member states is determined by their general level of prosperity, and not by the scale of the pandemic’s economic effects. Funds are redistributed from countries with higher per capita income to poorer member states. It is true that particularly hard-hit countries such as Spain or Italy will also benefit from the redistribution. Still, the authors argue that NGEU is not really an insurance policy against the coronavirus crisis, but rather an extension of traditional EU cohesion policy.
Publication (in German)
Coronavirus Recovery Plan: Test of Cohesion in the EU?
ifo Institut, München, 2021
ifo Schnelldienst, 2021, 74, Nr. 02, 03-30
