N. Peter Kramer’s Weekly Column
The European Commission is once again asking the member states for more money. President Ursula von der Leyen wants an additional 66 billion euros for measures against illegal immigration, more aid to Ukraine and financial setbacks. One of these financial setbacks is the extra interest costs of the corona recovery fund.
In 2020, when the corona crises caused problems for the EU, of course the southern member states looked to Brussels for a solution. The corona recovery fund was created and given a noble destination. It would stimulate innovation in the lagging economies. With 800 billion (!) euros, these economies would be propped up and reformed. And, new in EU history, the European Commission was allowed to borrow money on the financial markets for the first time. It would significantly increase confidence in the economy and politics!
Euphoria everywhere, in the capitals of the southern countries in particular. Italy, the 4th biggest economy in the EU, for example would be finally going digital. Unfortunately, in retrospect, the results are quite disappointing. The intentions to modernise the economy are not being implemented everywhere. For instance Italy, with 190 billion largest recipient from the fund, wanted to put money into football stadiums. Digitised football?
In the meantime, borrowing money on the financial market is not free, perhaps the unexperienced Commission didn’t know that. Anyhow, the result is, that the interest costs of the recovery fund amount to 19 billion euros. One of the financial setbacks for which President von der Leyen is now begging. A true but expensive lesson for the future.