Good morning.
Europe needs to spend trillions on climate targets, defence upgrades and tech infrastructure in the coming years. The political debate in Brussels often frames this as a burden — a cost we must somehow shoulder.
But what if Europe's trillion-euro ‘problem’ is actually a money-maker? At a day-long congress devoted to the pandemic’s recovery and resilience fund (RRF) on Thursday, EU Commission officials laid out their case.
According to their figures, some €650bn in pandemic spending is set to generate around €900bn in economic output this decade.
That means that for every euro invested through the pandemic fund, the return is €1.36. When looking at energy investments specifically, that number jumps to €1.69 per euro invested.
If that holds, money invested in EU priorities such as grids and energy, even if debt-funded, would not threaten public debt sustainability and would earn more than it costs.
Another titbit that emerged from the congress is that Germany and the Netherlands — two wealthy countries that fought hardest against the fund in 2020 because they didn’t want to support weaker economies like Italy — turned out to benefit most from the plans.
The Netherlands received €4.3bn, but spillover effects from pandemic funds invested by other countries boosted its economy to a total impact of €13bn. Over half of that came from Spain and Italy.
In Germany, two-thirds of its €66bn gain came from increased RRF-related orders in surrounding countries, mostly benefiting the country’s currently ailing manufacturing sector.
Not everyone left the congress convinced by the commission’s rosy picture. “The effects of [RRF-]reforms are immeasurable,” Päivi Leino-Sandberg, a Finnish professor of transnational European law, told Euobserver. “If they have effects, this really cannot be known now.”
She also pointed out that EU officials conducting the research were “bound by staff regulations to promote institutional interests” and complained that the event was a “PR exercise – part of the commission’s effort to present the RRF as a success.”
Wester van Gaal, economics editor
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