In July 2020, the European Council agreed on a new mechanism – Next Generation EU – to fund a €750 billion financial support to help member states’ recovery from the COVID-19 pandemic.
In this European Policy Analysis, Erik Jones, professor at the Johns Hopkins School of Advanced International Studies, describes both the intense bargaining leading up to the agreement and its implications. Highlighting the important differences of principle between Member States, he underlines that Europe came to agreement and not consensus.
According to the author, there are three main differences between Next Generation EU and the management of the economic and financial crisis that started in 2007/2008, as the new recovery package
underscores the solidarity across EU member states,
consolidates an expansion of competences within the European Commission, and
lays the foundations for more effective pan-European macroeconomic stabilization.
As a source of market confidence, the agreement has generated indirect macroeconomic benefits. The expression of solidarity has also strengthened popular support for European integration.
The implications are thus significant, the author writes. The difficulty lies in building on those foundations. One challenge will be the Member States’ management of their recovery and resilience plans: their success will determine whether Next Generation EU is a one-off experiment or a model for the future.