EU could use long-term budget to solve North / South divide, says leading thinktank

ADVERTISEMENT

The European Union could use its seven-year budgetary plan to tackle inequalities exacerbated by the COVID-19 pandemic, leading European thinktank Bruegel says.

The idea of debt-sharing corona bonds is now too toxic to be a solution, Deputy Director Maria Demertzis told Euronews Now.

“I think the mutualisation of debt in the form of a corona bond which effectively means the common issuing of debt is not feasible any more,” Demertzis said. “I think it is actually toxic in some countries and therefore every time it has been mentioned it’s deleterious to the discussions so I don’t think this is going to be the future.”

But she argued the unequal impact of the pandemic on the continent could be counter-balanced by the bloc’s long term budgeting, which is currently up for negotiation.

“The fact of the matter is that countries like Italy and Spain, and now we see also France and possibly the UK, have been hit very hard by the pandemic,” Director Maria Demertzis told Euronews Now. “For the moment these countries need help because they have been hit very hard. And the other thing is how robust the economies were before the pandemic. And there we see countries like Germany or the Netherlands, simply because they are not very highly indebted are in a better position to deal with the shock. The question is can we take a sufficiently long term view about what we want the future to look like.

“The proposal which is currently on the table will probably involve the European budget more actively. The European budget discussions have just begun for the next seven-year cycle and the commission certainly is trying to push a more active role for the European budget, that would be another way of mutualising risks, provided that the size of that budget is sufficiently big, then this would be a way of thinking about how to help those that need the help the most .”