June 18th, 2020
This week's EU summit will attempt to push through ground-breaking plans for a 750 billion euro post-pandemic stimulus. Objections of the self-styled 'Frugal Four' - Austria, the Netherlands, Denmark and Sweden - will be closely watched. Are they just stalling for time or can they block the so-called Green Recovery Plan - comprising joint debt issuance, 2/3rds grants vs. loans aimed at the most needy regions and targetting spending at a greener, more digitalized economy? Germany has bought into the joint debt-raising after years of objections, prompting sceptical markets to sit up and take notice of Europe moving toward a more centralised fiscal stance to match the single monetary policy maker of the ECB. Alongside national government stimuli, such as Germany's 130 billion euro plan, the plan packs a punch as well marking a symbolic move toward greater cohesion, taking considerable pressure off the ECB as the only support for the bloc's shocked economy.
Chart by Ritvik Carvalho and commentary by Mike Dolan
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