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Fuest, Clemens
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[Journal:] CESifo Forum [ISSN:] 2190-717X [Volume:] 22 [Year:] 2021 [Issue:] 01 [Pages:] 03-08
In the face of an unprecedented economic recession caused by the Covid-19 pandemic, the EU has set up the biggest stimulus in its history - a 750-billion-euro fund called "Next Generation EU" - to support economic recovery. This initiative is ground-breaking as it includes grants and loan facilities for member countries, financed by EU borrowing. It stresses the importance of maintaining economic stability and strengthening social cohesion within the EU, while critics argue that it will undermine financial discipline in the EU and create the conditions for a "transfer union" in which some member states live at the expense of others. This program is designed as a one-time, temporary intervention, but if successful, it will signal a new direction for EU fiscal cooperation.
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