13 May 2024

EURACTIV: NextGenEU vital to bloc’s future competitiveness, stresses Eurogroup chief Paschal Donohoe

The EU’s multibillion pandemic recovery fund is the key “piece in the jigsaw” of how to finance the bloc’s core economic objectives until private markets are sufficiently integrated, Eurogroup President Paschal Donohoe told Euractiv in an interview.

Speaking ahead of a meeting of eurozone finance ministers in Brussels, Donohoe said that the €806.9 billion Next Generation EU (NextGenEU) is key to boosting the bloc’s lagging competitiveness — as member states grapple with new EU fiscal rules.

He noted that the programme — currently meant to be wrapped up in 2026 — functions as “a way of bridging the timing gap” while negotiations to deepen the Capital Markets Union (CMU) — plans for which were first announced in 2015 — remain ongoing.

“[NextGenEU] for me, is the piece in the jigsaw that allows us to reconcile the need to normalise budget policy but give a higher priority to capital investment than we’ve done in the past,” Donohoe said.

“We need to acknowledge that the key issue will be one of timing regarding how we galvanise savings [via the CMU] in such a way that they’re capable of impacting our economic performance this decade,” he added.

“And that is why we can’t lose sight of the importance of Next Generation EU […] as a way of bridging the timing gap.”

Agreed at the height of the COVID-19 pandemic in July 2020, NextGenEU offers member states financing to make critical green, digital, and other investments in exchange for targeted reforms. It is the first-ever EU scheme to be funded through debt jointly underwritten by member states.

While EU Commissioner for the Economy Paolo Gentiloni officially called for turning it into “a blueprint” for permanent joint borrowing in April, the scheme’s renewal is currently heavily resisted by conservative political groups as well as ‘frugal’ member states — including Germany, the bloc’s largest economy....

 more at EURACTIV

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