Conflicting camps divided over debt tactics in ‘war effort’

The ‘frugal’ nations, such as Germany, want to nationalise the cost of the war on the pandemic, forcing individual states to take on massive debt. Nine countries, including Ireland, want the creation of a ‘coronabond’ so the EU as a whole can shoulder the cost of the emergency. Who will prevail?

29th March, 2020
Conflicting camps divided over debt tactics in ‘war effort’
The governments of Germany, Austria and the Netherlands want each individual country to fund their own way out of the crisis. Picture: Getty

The ECB has learned the lessons of the euro crisis. Rather than perpetually wait for the European Council to make a non-decision, it acted swiftly. Last week it provided the legal basis for its new Pandemic Emergency Purchase Programme (PEPP). It clearly states that the ECB is committed to temporarily buying unlimited amounts of government debt.

The purpose of this bond buying programme is to bring down the cost of government borrowing. It is designed...

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