Estimates of payments countries will receive from the Next Generation EU instrument can be made with some degree of precision. But estimating countries' repayments up to 2058 is extremely difficult.
The estimation of payments from the
European Union’s COVID-19 economic recovery fund, Next Generation EU
(NGEU), to each EU country in 2021-2026 involves uncertainties, yet the
overall magnitudes can be estimated with a reasonable degree of
precision. In contrast, estimating member states’ contributions to the
repayment of EU debt (which will be issued to finance NGEU spending) is
burdened with enormous difficulties, primarily related to the
uncertainty of gross national income projections up to 2058. Some
numerical scenarios can be put forward to illustrate the difficulties in
estimating the amounts of such future contributions.
Proposals to introduce new direct revenues
to the EU budget (‘own resources’) are welcome because of their
positive externalities, such as reducing harmful emissions or levelling
the playing field in the single market. But ultimately, new revenue
sources for the EU budget imply that such revenues will not accrue to
Instead of concentrating on
net balances, NGEU should help to focus more on effective, efficient and
fair ways of spending EU money and the long-term benefits countries can
derive from it.
The EU’s traditional way of calculating
net balances in relation to the EU budget disregards the economic impact
of the EU budget. This is a drawback for the standard seven-year EU
budget, but especially problematic for NGEU, which is a temporary
instrument. A proper analysis should compare the scenario in which there
is no NGEU with the NGEU scenario, in which increased incomes arising
from NGEU should also be considered in addition to direct cash flows
between the EU budget and member states.
Assessing the economic impact of NGEU is
very difficult, while the European Commission’s impact assessment seems
greatly exaggerated. Even one-half of the estimated impact of the
Commission’s ‘low additionality’ scenario would make all EU member
states net financial beneficiaries of NGEU.
Instead of concentrating on net balances,
NGEU should help to focus more on effective, efficient and fair ways of
spending EU money and the long-term benefits countries can derive from
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