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Paradigm shifts
by Susan Watkins
28 July 2021

Emerging from year zero of the pandemic, the us and eu have adopted recovery programmes widely acclaimed as historic turning points. The Next Generation eu programme (ngeu) offers €750 billion to help member states towards a greener, more digitized recovery. The sum is relatively modest but, critically, the project endows the European Commission with the power to leverage its budget by borrowing on the markets. For its admirers, this initial offering is the thin end of a transformational wedge. ‘If the eu borrows €500 billion this year for a European recovery fund, then it could easily borrow another €1 trillion next year for a digital-inclusion fund, and then maybe €2 trillion for vehicle electrification or €3 trillion for a comprehensive climate-change fund’, argued Anatole Kaletsky, former economics editor of The Times. The ngeu represented ‘a Hamiltonian moment’ for the fractious bloc. As in the 1790 compact between America’s founding fathers, debt could be the catalyst for a stronger federal centre and deeper continental union.


Susan Watkins