Monday June 1, 2020

EU is making the right noises on fiscal fightback against Covid-19

The new proposal to issue €500 billion in common European debt is a big step in the right direction – assuming it gets the green light

24th May, 2020
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German chancellor Angela Merkel; ‘Any proposal to improve the functioning of the EU goes nowhere unless it has full German support.’ Picture: dpa

It has been a busy week in European politics. France and Germany announced a joint initiative that proposes to allow the EU to issue €500 billion in common European debt. Even though it is just a proposal, it is a huge step forward.

Christine Lagarde, the president of the European Central Bank, said that the key element in assessing debt sustainability was not the debt-to-GDP ratio, but the growth rate and the interest rate. This...

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