18 February 2021

Bloomberg: EU’s New Fiscal Weapon Is Operational, It’s a Lifeline for Italy

European Union governments banking on hundreds of billions of euros in recovery funds to revive their economies can start putting forward their plans from Thursday when the bloc’s newest economic weapon becomes operational.

The Recovery and Resilience Facility is designed to hand out 312.5 billion euros ($375 billion) of grants and 360 billion euros of low-interest loans over the next six years to help the EU’s 27 members recover from the Covid-19 pandemic and refit their economies for the challenges of what it sees as an increasingly hostile world.

The fund is part of last summer’s landmark agreement to fund stimulus spending with jointly backed debt -- a significant step toward tighter integration -- and the European Commission projects it will deliver a 2% boost to economic output by 2024.

“I don’t think we will have another opportunity as this one to rebuild our economies better after this crisis,” EU Economic Affairs Commissioner Paolo Gentiloni said in an interview with Bloomberg Television this week.

The recovery fund aims to kickstart EU plans to eliminate carbon emissions over the next 30 years and modernize its economy to properly take advantage of the digital revolution. It’s also meant to encourage countries like Poland and Hungary to honor their commitment to EU values on issues like rule of law and press freedom.

Italy’s incoming prime minister, Mario Draghi, compared the task to his country’s postwar rebuilding effort as he set out the agenda for his new government in the Senate in Rome on Wednesday. Italy is one of the biggest beneficiaries of the recovery package and arguably its most troubled economy. Draghi was clear that Europe’s fate will be shaped by Italy’s efforts to turn around its fortunes....

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