EEAG: EU Coronavirus Recovery Package Needs Improvement

Economists from Europe and the US are calling for changes to the Next Generation EU (NGEU) package to repair the damage caused by the coronavirus crisis. ifo President Clemens Fuest said, “As things stand, the requirements stipulate the allocation of funds to climate action and digitalization. This is almost impossible to enforce. The package also lacks a focus on cross-border projects that have an impact across Europe.” His remarks were made at the presentation of a report entitled “Beyond the Coronavirus Crisis: Investing for a Viable Future.” Published by the European Economic Advisory Group (EEAG), the report was presented in Brussels on Tuesday.

“Currently, the program is too narrowly focused on additional spending. Furthermore, it does not ensure that the money is spent wisely,” the report continues. Instead, the economists say, it would be better for countries to set specific targets and decide how to achieve them at their own discretion. Member states should then be assessed based on their achievement of these targets and receive appropriate support.

The economists recommend using more of the funds to offset market failures. Examples include creating cross-border infrastructure that supports the digital transformation or increasing public sector efficiency so as to strengthen social cohesion. Spending should not duplicate initiatives of individual countries.

Still, the economists add that sharing the burden among EU countries through the NGEU is a positive sign of cohesion and solidarity in the bloc.

The EEAG is made up of seven economists from seven countries. This year, the chair is Harold James (Princeton University). The other members are Torben Andersen (Aarhus University), Giuseppe Bertola (University of Turin